for personal use only - asx2011/03/31 · the company announced it had made the final payment for...
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Annual Report 2010oOh!media Group LimitedACN 091 780 924ASX Code: OOH
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Contents PageChairman’s Report 01Highlights/Key Events of 2010 02CEO’s Report 03Directors’ Report 04 Corporate Governance 15Statement of Comprehensive Income 24Balance Sheet 25Statement of Cash Flows 26Statement of Changes in Equity 27Notes to the Financial Statements 28Directors’ Declaration 62Auditor’s Independence Declaration 63Independent Auditor’s Report 64Shareholder Information 66
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Chairman’s Report
01
It is extremely pleasing to report yet another record result for shareholders.
These figures are the result of outstanding management and outstanding staff:
• NPATup43%to$7.0million• Revenueup28%to$109.7millionversusindustrygrowthof19%• 42%EBITDAgrowthto$21.1million• Debt/EBITDAratioreducedto1.7times• EPSup38%to1.8cents.
EightyearsagooOh!mediaembarkedonastrategyofgrowingthebusinessbothorganicallyandbyacquisition.Sincethenwehavemade14valueaccretiveacquisitionsandhavesubstantiallyincreasedouradvertisingassetinventoryacrossallourmajorproductformats.
ThesharepricemorethandoubledbetweenJanuaryandDecember2010.ButinvestorsarenottheonlypeopletonoticetheoutstandingperformanceofoOh!media.Herearesomeotherendorsements:
• AdNews‘Top3MediaCompany’2008,2009and2010.• BRWFast100Company2009• BRW50BestPlacestoWorkCompany2010• Ernst&YoungEntrepreneuroftheYear2010–EasternRegionWinner:BrendonCook
ThisrecognitionhasbeenbroughtaboutasaresultofmarketleadershipinRegionalandmanyMetropolitanoutdoormarkets,atrackrecordofstronggrowthandtheexperienceofthemanagementteam.
Inanenvironmentwherethereisastrongfocusonliquiditymanagementandagenerallyheldbeliefthatdebtlevelsneedtobecarefullymanaged,yourcompanyhasbeenabletostrengthenitsBalanceSheetinthisregard.
During2010,NetDebtwasreducedfrom$56.1millionto$36.4million(3.8XEBITDAdownto1.7XEBITDA).SincethentheNetDebthasbeenfurtherreducedto$26.0Million(1.2xEBITDA).
Thesereductionswereachievedasaresultofacombinationoffreecashflowandaverysuccessfulcapitalraisingwhichwaspricedatapremiumtothemarket.
Ourbankingfacilitiesaremorethanadequateforthefutureoperationsandwecontinuetooperatewellwithinallbankingcovenants.
NotwithstandingtheimpressiveongoingperformanceofoOh!media,thereisnocomplacencyabouttheneedtoreviewthebuildingblocksoffutureperformanceonacontinualbasis.Theprincipalbuildingblockisourpeopleandweareacutelyawareoftheneedforinvestmentinprogramsunderpinningstaffretentionanddevelopment.Thisleadstostabilityandensuresweneverlosesightofourexistingandpotentialcustomers.
Inaddition,weareconstantlylookingforimprovementsinourproductportfoliowithafocusondevelopingbetterwaystoutiliseproductmixthroughmarketing,salesandtechnologyupgrades.
Thusweplantocontinuetoleadthemarket.
Iwouldliketoexpressourappreciationofthesupportreceivedfrombothofourmajorshareholders,MacquarieandWPP.TheirpresenceattheBoardtablehasbeenasignificantfeatureinthecontinuedsuccessofoOh!media.
AgainIwishtopaytributetoBrendonCookandeverymemberofthestaffatoOh!media.Theirdedicationandprofessionalismisexemplaryandisamodelfor any organisation .
Itispleasingtonotethat2011hasstartedverywellandwelookforwardtoanothergoodyear.
Thankyouverymuchforyourcontinuedsupport.
GrahamJones31March2011
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Highlights / Key Events of 2010
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Key Events
07.05.10 oOh!media launches all-in-one home and workshop on wheelsChiefExecutiveOfficerBrendonCooksaidacalltostaffforsome‘out-there’solutionstoimprovecustomerservice,productivityandprofitpromptedauniquetakeonthemobilehomeofficeconcept–acustom-fittedsemi-trailercompletewithbedroom,kitchen,officeandworkshop–thatwilltravelAustraliatoservicethecompany’s5,000+retailadvertisingsites.
Acostanalysisofwhatwasrequiredshowedthatbybuildingamobilehome/officeworkshopfortheassetmanagertobasehimselfoutofforthemainpartofayear,thecompanyisexpectedtorealisesavingsofsome$250,000p.a.asaresultofextendedlifeofinventory,reducedfreightcostsandtravelandaccommodationsavings.
“Itallowsustomaintainandupdatesitesinshoppingcentresinacosteffectiveandtimelyway,stayintouchwithourregionalclientsandgeton-the-groundfeedback,”MrCooksaid.
15.06.10 oOh!media’s WA growth is the tonicFollowingitsmajorexpansioninthePerthmarketoverthepastfouryears,oOh!mediaappointedsalesrepresentationcompany,MediaTonic,toenhanceitsdeliverytolocalclientsandagencies.WesternAustraliahasbeenakeyfocusareaforthecompanysince2006asithadidentifiedsignificantdemandformarketerstogaingreaterconnectionwithconsumersthroughout-of-homeadvertising.
Wehaveinvestedheavilyininfrastructureandhavemorethandoubledourlargeformatbillboardinventory,introducedretailadvertisingin58shoppingcentresandwecontinuetoaddregionalbillboardstoouroffering.
25.06.10 oOh!media named one of the top 50 Best Places to Work for 2010BasedontheGreatPlacetoWorkInstituteAustralia’sannualresearchwhichconsideredthecultureoftheorganisationandresultsofatrustindexsurveywithstaff,oOh!wasoneofonlysevenmediacompaniestomakethelist.
30.11.10 oOh!media announces $20 million placementoOh!mediaannouncedithadsuccessfullyraised$20milliontohelpthecompanypursuefurthergrowthplansthroughtheplacementof99,248,120newor-dinarysharestoinstitutionalandsophisticatedinvestors.ThefullysubscribedcapitalraisingfollowedNovember’sannouncementthatthecompanyexpectedrevenuestoincreasebyupto38%tobetween$108millionand$110million-thefourthconsecutiveyearofdoubledigitearningsgrowth.
31.01.11 oOh! makes final payment for Sports and Outdoor MediaTheCompanyannouncedithadmadethefinalpaymentforitsSportsandOutdoorMediaPtyLtdacquisitionearlierthanthecontracteddate,followingitsrecentsuccessfulcapitalraising.Undertheearlysettlementagreement,$18.5millionwaspaidtothevendor,consistingof$4.2millioninordinarysharesat20centspershareand$14.3millionincashforthebalanceofthedeferredconsideration.Therearenofurtherpaymentstobemadeinrespectofthisacquisition.
Highlights
•Salesrevenuewasupby28%overthecorrespondingperiodin2009,againstanindustryincreaseof19%.•EBITDAwasup42%overthecorrespondingperiodin2009.•EBITmarginimprovedfrom13.0%in2009to15.4%in2010.•TheGroupdelivereda$2.1millionnetprofitimprovementover2009.
Underlying Media Revenue ($M)
2003 24.1
2004 29.1
2005 32.8
2006 34.4
2007 55.7
2008 75.5
2009 86.0
2010 109.7
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Strategy Overview
WecontinuetoleadthemarketinRegionalAustralia,inbothlargeformatandretailproducts,throughbringingnewadvertisersontoourinventory.
Wehavethemostshoppingcentresofalltheout-of-homemediacompanies,withfurthergrowthinsignandcentrenumbersplannedfor2011andbeyond.Thisleadershippositionwithatrulynationalretailofferingcontinuestoattractadvertisingspendawayfromothermediums.
Ourlargeformatsignshavebeenboostedin2010bythepost-GFCrecoveryandnewsignsthroughtenderswinsinSydney,andthroughthe continued promotion of this format and increased adoption of MOVEastheindustryaudiencemeasurementcurrency,weexpectsolidgrowthinthisareaalso.
StaffoOh!mediaiscommittedtoitscultureandinvestmentinstaff.Stafftraining,developmentandretentionarecriticaltooOh!mediacontinuingtodeliverincreasingmarketshareandvaluetoourshareholders.Ourinclusioninthe2010BestPlaceToWorkInstitute’s‘Top50employers’lististestamenttotheimportanceweplaceonourstaffandourworkplace.
Future Outlook
TheBoardandmanagementareconfidentthatthecompany’searningsaresustainableandthatourcoreproductshavepotentialforgrowthanddevelopmentthatwillcontinuetoseethecompanyperformstronglywithinthegrowingoutdoormediasector.
Wewillcontinuetoinvestinnewinventoryandwell-pricedacquisitionswheretheymakestrategicsenseandifandwhentheybecomeavailable.Itisnosurprisethatwemakethesamestatementforanotheryear,namelythat“thebusinessisstructuredforsustainableperformancewithinchangingeconomicconditions”.
BrendonCookCEOandManagingDirector31March2011
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CEO’s Report
Results commentary
In2010,wecontinuedtheearningsgrowthshownoverthelast5years.
Ourplanstoinvestinorganicgrowthandtounlockthevalueinouracquisitionshasonceagainbeensuccessful.Theacquisitionswehavemadecontinuetoperformabovetheirpurchasemultiples,asplanned.
Wecontinuedtodeliveronourmarketsharegrowthplansaroundour3coreproductareas:bigbillboardsinmetropolitanareas,regionalbillboardsandretailmedia.
Revenuesfortheyeargrew28%to$109.7million,cappingoff3yearsofmassivegrowth:97%from2007to2010.OurmarketshareinAustraliahasdoubledduringthisperiod(theoutdoorindustrygrew9%overthissameperiod).
Thisdoublingofmarketsharehasbeensoundlyexecutedandwehavebeencarefulnotto‘buy’revenueorimpactprofitabilitybyincreasingourfixedcostbasefasterthanourrevenue.IndeedourEBITDAmarginhascontinuedtogrow,reaching19.2%for2010.
Inthelast8consecutiveyearsofrevenuegrowth,therehasonlybeen1quarterwhererevenuegrowthhasnotexceededthecorrespondingquarterinthepreviousyear.
Oursuccessfulbusinessmodeltodatehasbeenbuilton: -salessuccessthroughchangingeconomicconditions; -expansioninhighermarginproducts; -lowriskpropertyownershipprofiles;and -scalableoperationsmeaningwecanaddmoreinventory withlittleneedforadditionaloverheads.
Ourdiversepropertyownershipbasemeansthatnoonepropertycontractdeliversmorethan4%ofourrevenue.
Ourbalancesheetwasstrengthenedsignificantlywiththe$20millioncapitalraisingandsubsequentsettlementofthebalanceoftheSportsandOutdoorMediaacquisitioninDecember2010andJanuary2011.
ThecompanyisinastrongfinancialpositionwithrecentdebtreductionandaDebt/EBITDAratioamongstthelowestintheAustralianmediasector.
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Directors’ Report
The consolidated net profit after tax for the year comprises: 2010 2009
$’000 $’000
Revenuefromsales 109,700 86,040
Earningsbeforenetborrowingcosts,tax,depreciationandamortisation 21,117 14,925
Depreciationandamortisation (4,306) (3,779)
Earningsbeforenetborrowingcostsandtax 16,811 11,146
Netborrowingcosts (5,629) (4,661)
Profitfromordinaryactivitiesbeforeincometax 11,182 6,485
Incometax(expense) (4,154) (1,594)
Netprofitaftertax 7,028 4,891
Results and financial position
YourDirectorspresenttheirreportonoOh!mediaGroupLimitedforthe
yearended31December2010.
Directors
ThefollowingpersonswereDirectorsoftheCompanyduringthewhole
year and until the date of this report:
MrBrianBickmore
MrChristopherBregenhoj(ExecutiveDirector)
MrBrendonCook(ManagingDirectorandCEO)
MrGrahamJones(Chairman)
MrDavidStanden
MrGeoffreyWildAM
Netcashflowfromoperatingactivitiesfortheyearamountedto$14,032,000(2009:$9,697,000),animprovementof$4,335,000.
Netcashflowfortheyearamountedto$11,373,000(2009:$591,000)reflectingtheincreasedcashflowfromoperatingactivitiesandproceedsfromshare
issues in the year.
Netassetsfortheyearincreasedby$20,001,000to$87,091,000at31December2010.
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Principal activities
oOh!mediaGroupLimitedistheonlypureout-of-homemediacompany
listedontheASX.TheGroup’sactivitiesincludeout-of-homemedia,
productionandadvertising.TheGroupcontinuestofocusontheoutdoor
advertisingindustryandaccordinglyithasmadeanumberofacquisitions
inthemediaindustry.Itintendstocontinuetogrowitsbusinessthrough
organicdevelopmentandacquisition.
Therewerenosignificantchangesinthenatureoftheactivitiesduring
thefinancialyear,otherthanasdetailedinthereviewofoperationsand
significantchangesinthestateofaffairsnotedbelow.
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Information on Directors
Particulars of Directors’ interests in
shares and options of the Company
Director Special Responsibilities Independence Shares Options
Non-executive Directors
MrBrianBickmore ChairmanofAuditCommitteeChairmanofRemunerationCommittee
Independent 130,000 750,000
MrGrahamJones,Chairman MemberofAuditCommitteeMemberofRemunerationCommittee
Independent 100,541 750,000
MrDavidStanden MemberofAuditCommittee Notindependent - 750,000
MrGeoffreyWildAM MemberofRemunerationCommittee Notindependent - 750,000
Executive Directors
MrChristopherBregenhoj MemberofAuditCommittee Notindependent 13,650,000 4,500,000
MrBrendonCook CEOandManagingDirector Notindependent 11,559,250 6,000,000
Dividends
Nodividendswerepaidduringtheyearandnodividend
is proposed.
Review of operations
TheGroupoperatedintheout-of-homemediaindustry.Currentlythe
GrouphasoperationsonlyinAustralia.
Significant changes in the state of affairs
On16November2009,theGroupannouncedthatithadfinalisednegotiationstoextendthedateoffinalpaymentforSportsandOutdoorMediaPtyLtdto31December2011,withtherightforearlyrepayment.Underthenewagreement,theGroupextendedthefinalinstalmentto31December2011,fortheissueof$1.2millioninsharesiftheoutstandingamountwasnotpaidby31December2009,andafurtherpaymentof$1.2millionincashifthefinalinstalmentwasnotmetby31March2010.Thecompanyalsoannouncedthataspertheoriginalacquisitionagreement,deferredconsiderationof$2.3millionincashand10millionoOh!mediasharesforachievingtheperformancecriteriawouldbesettledby31March2010.
On31January2011,theCompanyannouncedithadmadethefinalpaymentforitsSportsandOutdoorMediaPtyLtdacquisitionearlierthanthecontracteddate,followingitsrecentsuccessfulcapitalraising.Undertheearlysettlementagreement,$18.5millionwaspaidtothevendor,consistingof$4.2millioninordinarysharesat20centspershareand$14.3millionincashforthebalanceofthedeferredconsideration.Therearenofurtherpaymentstobemadeinrespectofthisacquisition.
Matters subsequent to the end of the financial year
Thereisatthedateofthisreportnomatterorcircumstance,otherthanas
notedinnote29tothefinancialstatements,whichhasarisensince
31December2010thathassignificantlyaffectedormayaffect:
i. theoperationsoftheGroup;
ii. theresultsoftheseoperations;or
iii. thestateofaffairsoftheGroupforthefinancialyearssubsequentto
31December2010.
Likely developments and expected results of operations
Furtheracquisitionandgrowthopportunitiesarebeinginvestigated,
withaviewtobroadeningtheGroup’sbusinessbasetomaximise
shareholdervalue.
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Directors’ Report
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Qualification and experience of Directors Non-executive Directors Mr Brian Bickmore (appointed17May2005)BrianBickmoreisoneofAustralia’sleadingmediaexecutivesandbringstooOh!mediaconsiderablelocalandinternationalsuccessinbuildingandoperatingnationalmedianetworksandenterprises.AsafoundingexecutivememberandlongestservingDirectorofAustereoGroupLimited,MrBickmorehasbeenattheforefrontoftheAustralianradioindustryforover25years.FollowingMrBickmore’sretirementfromAustereoGroupLimitedin2004,heassumedindependentdirectorshipswithlistedmediagroupsRGCapitalRadioLimitedandPhotonGroupLimited.MrBickmoresubsequentlyassumedtheroleofIndependentChairmanofRGCapitalRadioLimited.HeisalsoChairmanofAustralianbakerycafechainPieFace.
Mr Graham JonesFCPA,FAICD(appointed5October2001) ChairmanGrahamJones,whoispresentlyPrincipalofWallaceJones&HoodPtyLtd,abusinessandartconsultancy,hashadalongcareerinbusinessinAustraliaandinternationally.MrJonesconductsasuccessfulconsultancyspecialisinginbusinessstrategy,reconstruction,costreductionandorganisationaleffectiveness.HehasheldthefollowingpositionsasTreasurerofIBMAustralia/NZandCFO/FinanceDirectorofRankIndustriesAustralia,CapitaFinancialGroup,HouseofFraserHoldings(incorporatingHarrodsLtd)andQantasAirwaysLtd.HeisalsoChairmanofMediaAccessAustralia,aNotForProfitorganisationencouragingaccesstoallformsofmediaforpeoplewithdisabilities.
Mr David Standen (appointed3July2006) DavidStandenisanExecutiveDirectorofMacquarieCapitalAdvisersLimited,aMacquarieGroupLimitedcompany,focusingoncorporateadvisoryandprivateequityinvestmentsinthetelecommunications,mediaandtechnologymarkets.PriortojoiningMacquarieBank,MrStandenhasservedinexecutivecapacitiesatNCR,AT&TandasaPartnerinthelegalfirmGilbert&Tobinandbringsmanyyearsoperationalandtransaction experience.
Mr Geoffrey Wild AM(appointed10July2007) GeoffreyWildhasspentoverthirtyyearsintheadvertisingindustry,includingasDeputyChairmanofClemengerBBDO,andaBoardMemberofBBDOWorldwide.HewasChairmanoftheNSWTourismCommission,andaDirectoroftheSydneyOlympicCommitteeBidCompanyandoneoffourVicePresidentsofthatCommittee.CurrentlyMrWildsitsonseveralboardsincludingasChairmanofWPPHoldings(Australia)PtyLtdandComOpsLimited.HeisDeputyChairmanofArabBankAustraliaLimited,andalongservingBoardMemberofPhilRuthven’sIBISWorld,thebusinessandeconomicforecastinggroupanduntilrecently,ofthePGA(ProfessionalGolfAssociation).HeisaformerDirectoroftheNSWTABLimitedandOPSM.HewasawardedtheOrderofAustralia(AM)in2000,forhiscontributiontobusiness,tourismandtheOlympics.
Executive Directors
Mr Brendon CookCEOandManagingDirector(appointed15November2002) BrendonCookfoundedOutdoorNetworkAustralia,nowknownasoOh!media,in1989.MrCookhashad32years’experienceinoutdoormediawithcompaniesincludingAustralianPosters,BritescreensandAlanDavis.MrCookisalsoaboardmemberoftheOMA(OutdoorMediaAssociationofAustralia)andhas,formorethan12years,beenanactivememberoftheExecutiveConnectionGroup,aninternationalorganisa-tiondedicatedtoincreasingtheeffectivenessofCEOs.
Mr Christopher BregenhojExecutiveDirector(appointed20February2000)ChristopherBregenhojworkedfor13yearsinHongKongwherehestartedhiscareerasapracticingaccountantandbecameapartnerinKPMG.SubsequentlyhejoinedMorganGrenfell(HongKong)LimitedasanAssociateDirector.In1988hereturnedtoAustraliawhereheestablishedFirstEquityCapitalLtd,aprivateinvestmentbankingandcorporateadvisorycompanywhichjoinedwithConsortiumCapitalLimitedandGeminiInvestmentHoldingsLimitedtoformGeminiCapitalLimitedin1996.Hewasappointedasnon-executivechairmanofHumanTherapeuticsGroupinDecember1999andhasbeenadirectorofoOh!mediaGroupLimitedsinceitsincorporationon28thFebruary2000asPi2Ltd.
Company Secretary
Mr Michael Egan (appointed3May2001)MichaelEganisCompanySecretaryoftheCompanyanditscontrolledentities.MrEganhasarangeofexperienceintheCharteredAccountingprofession,inbusinessandinconsulting.MrEganhasheldDirectorshipsinASXlistedcompaniesandinAustraliansubsidiariesofmulti-nationalcompaniesincludingAnglo-AustraliangroupRioTintoandHoechst(Germany).
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Directors’ Report
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Meetings of DirectorsThenumberofmeetingsoftheCompany’sBoardofDirectorsandotherBoardCommitteesheldduringtheyearwhiletherelevantDirectorwasinoffice,and
eligibletoattend,andthenumberofmeetingsattendedbyeachDirectorwere:
Full board meeting Audit Committee Remuneration Committee
Director Eligible to attend
Attended Eligible to attend
Attended Eligible to attend
Attended
MrBrianBickmore 12 12 2 2 2 2
MrChristopherBregenhoj 12 12 2 2 - -
MrBrendonCook 12 12 - - - -
MrGrahamJones 12 12 2 2 2 2
MrDavidStanden 12 7 2 1 - -
MrGeoffreyWildAM 12 12 - - 2 2
Retirement, election and continuation in office of Directors
EachDirectorholdsofficeuntilthefirstAnnualGeneralMeetingafterhis/herappointment,atwhicheachDirectorseekingre-electionasaDirectormustofferhimself/herselfforre-electioninaccordancewiththeCompany’sConstitution.TheManagingDirector,byreasonofholdingofficeasManagingDirectoroftheCompany,isexemptedfromtheprovisionsoftheConstitutionthatrequirehim/hertobere-electedtooffice.
Environmental Regulations
TheCompanyhasdeterminedthatthereisnoparticularorsignificantenvironmentallegislationwhichisrelevanttoitsoperations.
Insurance of Officers
Duringthefinancialyear,apremiumof$43,526waspayabletoinsureallDirectorsandofficersoftheCompanyandrelatedbodiescorporate.
TheliabilitiesinsuredincludecostsandexpensesthatmaybeincurredindefendingcivilorcriminalproceedingsthatmaybeboughtagainstanyDirectorintheircapacityasofficeroftheCompanyorarelatedbodycorporate.
Websites
FurtherinformationinrelationtooOh!mediaGroupLimitedanditscontrolledentitiesisavailableontheGroup’swebsiteatwww.oohmedia.com.au.
Proceedings on behalf of the Company
NopersonhasappliedtotheCourtundersection237oftheCorporationsAct2001forleavetobringproceedingsonbehalfoftheCompany,ortointerveneinanyproceedingstowhichtheCompanyisaparty,forthepurposeoftakingresponsibilityonbehalfoftheCompanyfor all or part of those proceedings.
NoproceedingshavebeenbroughtorintervenedinonbehalfoftheCompanywithleaveoftheCourtundersection237oftheCorporationsAct2001.
Auditor
PKFhavebeenappointedasAuditorinaccordancewithsection327oftheCorporationsAct2001.
Directors’ Report
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Independence declaration
InaccordancewiththeAuditIndependencerequirementsoftheCorporationsAct2001,theDirectorshavereceivedandaresatisfiedwiththe“Auditor’sIndependenceDeclaration”providedbytheGroupexternalauditorPKF.AcopyoftheAuditor’sIndependenceDeclarationasrequiredundersection307CoftheCorporationsAct2001issetout
onpage62.
Non-Audit Services
TheCompanymaydecidetoemploytheauditoronassignmentsadditionaltotheirstatutoryauditdutieswheretheauditor’sexpertiseandexperiencewiththeCompanyand/ortheGroupareimportant.
Detailsoftheamountspaidorpayabletotheauditorforauditandnon-auditservicesprovidedduringtheyeararesetoutbelow.
TheBoardofDirectorshasconsideredtheposition,and,inaccordancewiththeadvicereceivedfromtheAuditCommittee,issatisfiedthattheprovisionofthenon-auditservicesiscompatiblewiththegeneralstandardofindependenceforauditorsimposedbytheCorporationsAct2001.
TheDirectorsaresatisfiedthattheprovisionofnon-auditservicesbytheauditor,assetoutbelow,didnotcompromisetheauditor’sindependencerequirementsoftheCorporationsAct2001forthefollowingreasons:
• allnon-auditserviceshavebeenreviewedbytheauditcommitteetoensuretheydonotimpacttheimpartialityandobjectivityoftheauditor;and
• noneoftheservicesunderminethegeneralprinciplesrelatingtoauditorindependence,includingreviewingorauditingtheauditor’sownwork,actinginamanagementoradecision-makingcapacityfortheCompany,actingasadvocatefortheCompanyorjointlysharingeconomicriskandrewards.
2010$
2009$
Audit and other assurance services:
-Auditorreviewoffinancialreports 234,242 171,500
-Otherassuranceservices 20,790 2,100
Other Services:
-Advisoryservicesandtaxation - 4,500
DuringtheyearthefollowingfeeswerepaidorpayableforservicesprovidedbytheauditoroftheCompany,itsrelatedpracticesandnon-relatedauditfirms:
Rounding of amounts
TheCompanyisofakindreferredtoinClassOrder98/0100,issuedbytheAustralianSecuritiesandInvestmentsCommission,relatingtothe‘roundingoff’of
amountsintheDirectors’Report.AmountsintheDirectors’ReporthavebeenroundedoffinaccordancewiththeClassOrdertothenearestthousanddollars,
orincertaincases,tothenearestdollar.
Directors’ Report
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Remuneration Report ThisreportsetsoutinformationinrespectoftheCompany’sremunerationpoliciesinrespectofDirectorsandkeymanagementpersonnel,includingtherelationshipbetweenremunerationpoliciesandtheCompany’sperformance;prescribeddetailsofDirectorsandkeymanagementpersonnel;detailsofsecuritiesincludedintheremunerationofDirectorsandkeymanagementpersonnel;anddetailsofthecontractsunderwhichthesepersonsareemployed.
Principles used to determine the nature and amount of remuneration TheobjectiveoftheCompany’sexecutiverewardframeworkistoensurerewardforperformanceiscompetitiveandappropriatefortheresultsdelivered.Theframeworkalignsexecutiverewardwithachievementofstrategicobjectivesandthecreationofvalueforshareholders,andconformswithmarketbestpracticeforthedeliveryofreward.
TheBoardhasstructuredanexecutiveremunerationframeworkthatismarketcompetitiveandcomplementarytotherewardstrategyoftheCompanyandwhichistransparent.
Thealignmentoftheremunerationpolicytoshareholders’interestfocusesonmaintainingsustainablegrowthinshareholderwealththroughgrowthinsharevalueanddeliveringreturnsonassetsemployed.
Thealignmentoftheremunerationpolicytoparticipants’interestisbasedonprovidingaclearunderstandingfortheearningofrewards,reflectscontributiontoshareholderwealthandrewardsexperienceandcontribution.
Theframeworkprovidesforfixedpaywithablendofshortandlongtermincentives.
Non-executive Directors Feesandpaymentstonon-executiveDirectorsreflectthedemandswhicharemadeon,andtheresponsibilitiesof,beingaDirectorofalistedcompany.Remunerationfornon-executiveDirectorsconsistsofannualfeesandsuperannuationcontributions.Thefeespaidtonon-executiveDirectorsarereviewedannually.TheBoardasawholehasresponsibilityforreviewingandrecommendingthelevelofremunerationfornon-executiveDirectors. Directors’feeshavebeendeterminedonthebasisthattheyareappropriateandinlinewiththemarket,andtoensuretheCompany’sBoardiscomprisedofskilledandwell-qualifiedDirectors.
Thenon-executiveDirectorsareentitledtoparticipateintheCompany’sEmployeeShareOptionPlan(‘ESOP’).TheCompany’sconstitutionpermitsretirementbenefitsfornon-executiveDirectors.Non-executiveDirectors’feesaredeterminedwithintheaggregateannualfeespoollimitof$500,000.Thefeespaidtonon-executiveDirectorsareinclusiveof committee fees.
Key management personnel pay Thekeymanagementpersonnelpayandrewardframeworkhasfourcomponents: • basepayandbenefits;• long-termincentivesthroughparticipationintheCompany’sESOP;• bonusesfortheachievementofpresettargetswhereappropriate;
and• otherremunerationsuchassuperannuation.
Thecombinationofthesecomponentsformsthekeymanagementpersonnel’stotalremunerationpackage.
Basepayisstructuredasatotalemploymentcostpackagewhichmaybedeliveredasacombinationofcashandprescribednon-financialbenefitsatthekeymanagementpersonnel’sdiscretion.
Basepayforkeymanagementpersonnelisreviewedannuallytoensureremunerationlevelsarecompetitivewithmarketrates.Therearenoguaranteedbasepayincreasesincludedinkeymanagementpersonnel’scontracts.
Keymanagementpersonnelgenerallyreceivebenefitsincludingcarallowancesandcarparking. Retirementbenefitsareprovidedbycontributiontoanaccumulationsuperannuationfundofeachkeymanagementpersonnel’schoice.
Shorttermincentive(STI)bonusesarepaidtoindividualkey
managementpersonnelupontheachievementofpredetermined
personalobjectives.Thebasisofthebonusistiedtotheroleoccupied
bythekeymanagementpersonnelandthecorporateoutcomesthat
heorshecaninfluence.Theappropriatetargetsandkeyperformance
indicatorsaresetannuallyaspartoftheCompany’sbudgeting
procedures.
TheCompanyprovidesequity-linkedincentivestokeymanagement
personnelthroughtheCompany’sESOP.InformationontheCompany’s
ESOPissetoutbelow.
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Directors’ Report
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ThefinancialperformancemeasuresdrivingSTIpaymentsareearningspershare(EPS)andearningsbeforeinterest,tax,depreciationandamortisation
(EBITDA).DetailsofoOh!mediaGroupLimited’sEPSandEBITDAoverthefiveyearperiodfrom1January2006to31December2010aresetoutbelow:
2006 2007 2008 2009 2010
EPS(cents) 0.04 0.2 0.9 1.3 1.8
EBITDA($M) 1.1 7.5 11.3 14.9 21.1
Directors and key management personnelNames and positions held of parent entity Directors and key management personnel in office at any time during the financial year are:
Parent entity Directors:Name Role Period of tenureMrBrianBickmore Director–non-executive Allyear MrChrisBregenhoj Director–executive AllyearMrBrendonCook ManagingDirector&ChiefExecutiveOfficer–executive AllyearMrGrahamJones Chairman–non-executive AllyearMrDavidStanden Director–non-executive Allyear MrGeoffreyWildAM Director–non-executive Allyear
Key management personnel: Name Role MrNoelCook GeneralManagerRegional Allyear MrMichaelEgan CompanySecretary Allyear MrJohnO’Neill GeneralManagerSales AllyearMrMalcolmPearce GeneralManagerAssetsandOperations Allyear MrSimonYeandle ChiefFinancialOfficer Allyear
Service AgreementsRemunerationandothertermsofemploymentfortheexecutiveDirectorsandkeymanagementpersonnelinthetablebelowareformalisedinservice
agreements.DetailsofcurrentserviceagreementsinplacewithDirectorsorkeymanagementpersonneloftheCompanyaresetoutinthetablebelow.
Name Period of tenureTerm of
agreement Termination notice Termination payment
MrChristopherBregenhoj Allyear Unspecified 12months Noticeperiod
MrBrendonCook Allyear Unspecified 12months Noticeperiod
MrNoelCook Allyear Unspecified 6months Noticeperiod
MrMichaelEgan Allyear From1July2009to30June2011
FixedTerm Feesto30June2011
MrJohnO’Neill Allyear Unspecified 12months Noticeperiod
MrMalcolmPearce Allyear Unspecified 1month 3months
MrSimonYeandle Allyear Unspecified 12months Noticeperiod
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2009
Non-Executive Directors
MrBrianBickmore 75,000 - - - - - 75,000 100% - -
MrGrahamJones,Chairman 75,000 - - - - - 75,000 100% - -
MrEdwardPretty - - - - - - - - - -
MrDavidStanden 65,000 - - - - - 65,000 100% - -
MrGeoffreyWildAM 65,000 - - - - - 65,000 100% - -
Executive Directors
MrChristopherBregenhoj 277,950 35,100 104,528 - - - 417,578 75% 25% -
MrBrendonCook 325,000 20,750 172,018 44,732 - 40,954 603,454 64% 29% 7%
Total Directors 882,950 55,850 276,546 44,732 - 40,954 1,301,032
Other key management personnel
MrNoelCook 297,700 12,300 108,500 - - - 418,500 74% 26% -
MrMichaelEgan 126,000 8,700 20,205 - - - 154,905 87% 13% -
MrJohnO’Neill 402,400 4,800 165,440 - - - 572,640 71% 29% -
MrMalcolmPearce 234,125 4,800 83,490 28,585 - - 351,000 76% 24% -
MrSimonYeandle 205,233 6,300 83,028 25,944 - - 320,505 74% 26% -
Total other key management personnel 1,265,458 36,900 460,663 54,529 - - 1,817,550
2010 Short-term benefits
Post employment
benefitsShare-based
payments % of total
Name
Base fee/pay
$Benefits
$Bonus
$
Super -annuation
$Options
$Shares
$Total
$ Fixed
At risk -
STIShares/options
Non-Executive Directors
MrBrianBickmore 75,000 - - - 52,093 - 127,093 59% - 41%
MrGrahamJones,Chairman 75,000 - - - 52,093 - 127,093 59% - 41%
MrDavidStanden 65,000 - - - 52,093 - 117,093 56% - 44%
MrGeoffreyWildAM 65,000 - - - 52,093 - 117,093 56% - 44%
Executive Directors
MrChristopherBregenhoj 277,950 35,100 180,000 - 48,997 - 542,047 58% 33% 9%
MrBrendonCook 325,000 46,300 286,000 29,250 65,329 - 751,879 53% 38% 9%
Total Directors 882,950 81,400 466,000 29,250 322,698 - 1,782,298
Other key management personnel
MrNoelCook 297,700 12,300 175,000 - 6,533 - 491,533 63% 36% 1%
MrMichaelEgan 126,000 8,700 40,000 - 5,733 - 180,433 75% 22% 3%
MrJohnO’Neill 377,200 30,000 256,000 - 54,904 - 718,104 56% 36% 8%
MrMalcolmPearce 234,128 4,800 145,000 21,072 6,533 - 411,533 63% 35% 2%
MrSimonYeandle 230,229 6,300 150,000 20,721 11,120 - 418,370 61% 36% 3%
Total other key management personnel 1,265,257 62,100 766,000 41,793 84,823 - 2,219,973
Details of RemunerationDetailsofremunerationprovidedtoDirectorsandkeymanagementpersonnelaresetoutinthetablebelow.Thebonusesandcommissionsaredependent
onthesatisfactionofperformanceconditions.Allotherelementsofremunerationarenotdirectlyrelatedtoperformance.
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Share based compensation
AnEmployeeShareOptionPlan(‘ESOP’)isoperatedbytheCompanytoallowselectedpermanentemployeesandDirectorstoparticipateinthegrowthof
theCompanythroughtheissueofoptionsoverordinarysharesintheCompany.EligibilityforparticipationisatthediscretionoftheBoard.Optionsgranted
undertheCompany’sEmployeeShareOptionsPlan(‘ESOP’)wereapprovedbyshareholdersatameetingofshareholderson21May2010.
TheESOPisdesignedtoencourageretentionofkeyemployees,provideanincentiveforfutureperformanceandalignemployeeinterestswithshareholder
valueinthefuture.Optionsgrantedundertheplanarefornoconsideration.OptionsgrantedundertheCompany’sESOPcarrynodividendorvotingrights.
Theoptionsmustnotbetransferred,encumberedorotherwisedisposedofwithoutthepriorconsentoftheBoard.
Optionsareexercisable:
• atpredeterminedexercisedates;and
• atvariableexercisepriceswhichwerecalculatedhavingconsiderationtothesharepriceoftheCompanyatthetimetheESOPwasapprovedby
shareholders.
ExerciseoftheoptionsiscontingentuponkeymanagementpersonnelremainingemployedbytheCompany,within12monthsofceasingemploymentoron
achievingperformancecriteria.Whenexercised,eachoptionisconvertibletooneordinaryshare.
Shareholdings and Optionholdings of Directors and key management personnelThenumberofordinarysharesintheCompanyheldduringthefinancialyearbyDirectorsandkeymanagementpersonnel,includingtheirpersonallyrelated
entitiesaresetoutbelow.
Name
Balance atstart of
the year
Received duringthe year as
remunerationOther changes
during the yearBalance at end
of the year
Non-executive Directors
MrBrianBickmore 90,000 - 40,000 130,000
MrGrahamJones,Chairman 100,541 - - 100,541
MrDavidStanden - - - -
MrGeoffreyWildAM - - - -
Executive Directors
MrChristopherBregenhoj 13,650,000 - - 13,650,000
MrBrendonCook 11,559,250 - - 11,559,250
Total Directors 25,399,791 - 40,000 25,439,791
Other key management personnel
MrNoelCook 500,000 - (500,000) -
MrMichaelEgan 400,500 - - 400,500
MrJohnO’Neill 18,500,000 - (13,500,000) 5,000,000
MrMalcolmPearce - - - -
MrSimonYeandle 676,528 - - 676,528
Total other key management personnel 20,077,028 - (14,000,000) 6,077,028
12
Ordinary shares provided as remuneration875,195and1,624,805shareswereissuedtoMrBrendonCookon22May2006and3July2006fornoconsideration.Thesharesweresubjecttoescrowfor
aperiodof3yearsfromthedateofissue,andweresubjecttoforfeitureifMrCook’semploymentwiththeCompanyisterminatedforanycauseorMrCook
resignsasanemployeeatanytimewithin3yearsofthedateofissueoftheshares.
InaccordancewithAASB2ShareBasedPayments,thevalueoftheshareswasexpensedoverthevestingperiod.Thesharebasedpaymentexpense
recognisedfor2010inrespectofMrBrendonCook’sshareswas$nil(2009:$40,954).ThefairvalueofMrBrendonCook’sshareswascalculatedusingmarket
pricesatthetimeofissue.Noamountremainsunpaidonthesharesissued.
Sincetheendoftheperiodtowhichthisreportrelatesanduptothedateofthisreport,noshareshavebeenissuedundertheESOP.
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Holder
Grant date Vesting date Expiry dateExercise
price
Fair value of each option
at grant date
Outstand-ing at
1 January 2010
Issued during
the year
Lapsed / exercised
duringthe year
Outstand-ing at 31
December 2010
Non-executive Directors
MrBrianBickmore 21May2010 21May2010 20May2015 $0.12 $0.069 - 750,000 - 750,000
MrGrahamJones,Chairman
21May2010 21May2010 20May2015 $0.12 $0.069 - 750,000 - 750,000
MrDavidStanden 21May2010 21May2010 20May2015 $0.12 $0.069 - 750,000 - 750,000
MrGeoffreyWild 21May2010 21May2010 20May2015 $0.12 $0.069 - 750,000 - 750,000
Executive Directors
MrChristopherBregenhoj 21May2010 21May2012 20May2015 $0.12 $0.067 - 1,500,000 - 1,500,000
21May2010 21May2013 20May2015 $0.12 $0.058 - 1,500,000 - 1,500,000
21May2010 21May2014 20May2015 $0.12 $0.050 - 1,500,000 - 1,500,000
MrBrendonCook 21May2010 21May2012 20May2015 $0.12 $0.067 - 2,000,000 - 2,000,000
21May2010 21May2013 20May2015 $0.12 $0.058 - 2,000,000 - 2,000,000
21May2010 21May2014 20May2015 $0.12 $0.050 - 2,000,000 - 2,000,000
Total Directors - 13,500,000 - 13,500,000
Other key management personnel
MrNoelCook 21May2010 21May2012 20May2015 $0.12 $0.067 - 200,000 - 200,000
21May2010 21May2013 20May2015 $0.12 $0.058 - 200,000 - 200,000
21May2010 21May2014 20May2015 $0.12 $0.050 - 200,000 - 200,000
MrMichaelEgan 21May2010 21May2012 20May2015 $0.12 $0.067 - 200,000 - 200,000
21May2010 21May2013 20May2015 $0.12 $0.058 - 150,000 - 150,000
21May2010 21May2014 20May2015 $0.12 $0.050 - 150,000 - 150,000
MrJohnO’Neill 21May2010 21May2012 20May2015 $0.12 $0.067 - 1,700,000 - 1,700,000
21May2010 21May2013 20May2015 $0.12 $0.058 - 1,700,000 - 1,700,000
21May2010 21May2014 20May2015 $0.12 $0.050 - 1,600,000 - 1,600,000
MrMalcolmPearce 21May2010 21May2012 20May2015 $0.12 $0.067 - 200,000 - 200,000
21May2010 21May2013 20May2015 $0.12 $0.058 - 200,000 - 200,000
21May2010 21May2014 20May2015 $0.12 $0.050 - 200,000 - 200,000
MrSimonYeandle 21May2010 21May2012 20May2015 $0.12 $0.067 - 350,000 - 350,000
21May2010 21May2013 20May2015 $0.12 $0.058 - 350,000 - 350,000
21May2010 21May2014 20May2015 $0.12 $0.050 - 300,000 - 300,000
Total other key management personnel - 7,700,000 - 7,700,000
Options provided as remunerationThenumberofoptionsoverordinarysharesintheCompanyheldby,andprovidedasremunerationto,Directorsandkeymanagementpersonnelincluding
theirpersonallyrelatedentities,duringthefinancialyear,aresetoutbelow.
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Theassessedfairvalueatgrantdateofoptions,calculatedinaccordancewithAASB2ShareBasedPayments,grantedtoDirectorsandkeymanagement
personnelisallocatedequallyovertheperiodfromgrantdatetovestingdate,andtheamountsaredisclosedintheremunerationtables.Fairvaluesare
determinedusingaBlack-Scholesoptionpricingmodelthattakesintoaccounttheexerciseprice,thetermandexpectedlifeoftheoption,thevestingand
performancecriteria,theimpactofdilution,thesharepriceatgrantdateandexpectedpricevolatilityoftheunderlyingshare,theexpecteddividendyield
andtherisk-freeinterestrateforthetermoftheoption.
Inputsintothemodelusedaresetoutbelow:
Dividendyield:0%
Expectedvolatility:60%
Risk-freeinterestrate:5.60%
Expectedlifeofoptions:2.8to5years
Theseinputsarereviewedandupdatedforeachandeverygrantofoptions.
Termsofalloptions,optionexercisepricesandweightedaveragesharepricesatmeasurementdatearesetoutinnote20tothefinancialstatements.
Ordinary shares provided on exercise of remuneration options
NoordinarysharesintheCompanywereprovidedtoDirectorsorkeymanagementpersonnelasaresultoftheexerciseofremunerationoptions.
Loans to Directors and key management personnel
NoloanshavebeenmadetoDirectorsorkeymanagementpersonnel.
Directors’ benefits
Exceptassetoutinthefinancialreport,duringtheyearnoDirectoroftheCompanyhasreceivedorhasbecomeentitledtoreceiveabenefit,otherthana
remunerationbenefit,becauseofacontractthattheDirector,anentityofwhichtheDirectorisamember,oranentityinwhichtheDirectorhasasubstantial
financialinterest,hasmade(duringtheyearended31December2010oratanyothertime)with:
(a) theCompany,or
(b) anentitythattheCompanycontrolled,orabodycorporatethatwasrelatedtotheCompany,whenthecontractwasmadeorwhentheDirectorreceived,
orbecameentitledtoreceive,thebenefit.
ThisreportismadeinaccordancewitharesolutionoftheDirectors.
Mr Christopher Bregenhoj
Director,Sydney
31March2011
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Corporate Governance
Corporate Governance
TheBoardofoOh!mediaGroupLimitediscommittedtoadopting
thehigheststandardsofcorporategovernanceforoOh!mediaGroup
Limitedanditscontrolledentities(the‘Group’)consideringthesize
oftheGroup.Aspartofthisongoingcommitment,theboardhas
undertakenareviewofitscorporategovernanceframeworkagainst
theCorporateGovernancePrinciplesandRecommendations(Second
EditionCorporateGovernanceGuidelines)releasedbytheAustralian
StockExchange.TheGrouphascontinuedtorefineitscorporate
governancepracticesbasedonotherbestpracticespronouncements
andduringoOh!mediaGroupLimited’stradingontheAIMsegmentof
theLondonStockExchange,whoserulesmandatecertaincorporate
governancepractices.
TheimplementationoftheGroup’scorporatestrategiesandpoliciesis
delegatedtotheManagingDirectorandseniorexecutives.
TheDirectorsareresponsibletotheshareholdersfortheperformance
oftheGroupinboththeshortandthelongertermandseektobalance
thesesometimecompetingobjectivesinthebestinterestsoftheGroup
asawhole.Theirfocusistoenhancetheinterestsofshareholdersand
otherkeystakeholdersandtoensuretheGroupisproperlymanaged.
TheGroup’smaincorporategovernancepracticesaresetoutbelow.All
thesepractices,unlessotherwisestated,wereinplaceforthewholeof
the financial year.
1. The Board of Directors
TheBoardoperatesinaccordancewiththeprinciplessetoutbelow.In
developingandreviewingthesesprinciples,ithasbeenrecognisedthat
theGrouphasatightlyheldshareholderbase,withthetop10ofthe
Company’sapproximately1,000shareholdersholdinginexcessof91%
oftheequityintheCompany.ItisalsorecognisedthattheCompanyhas
amarketcapitalisationofapproximately$120million.
Composition of the Board
Ithasbeendeterminedthat:
• theboardshouldcomprisebothexecutiveandnon-
executiveDirectorswithamajorityofnon-executive
Directors.AllDirectors,butinparticularnon-executiveDirectors,
arechargedwithexercisingindependentjudgementandreviewof
performanceandrelatedriskissuesinrespectofoperatingactivities;
• inrecognitionoftheimportanceofindependentviewsoftheboard
andoftheBoard’sroleinsupervisingtheactivitiesofmanagement,
theChairmanoftheBoardmustbeanindependentnon-executive
Director;
• theChairmanoftheBoardiselectedbythefullBoardandisrequired
tomeetregularlywiththeManagingDirectorandChiefExecutive
Officer;and
• theGroupwillendeavourtomaintainamixofDirectorsfrom
differentbackgroundswithcomplementaryskillsandexperience.
Responsibilities
TheresponsibilitiesoftheBoardinclude:
• oversightoftheGroup,includingitscontrolandaccountability
systems;
• developmentandapprovalofcorporatestrategiesandperformance
objectives;
• reviewandapprovaloftheGroup’sbusinessplans,theannual
budgetsandfinancialplans,includingtheresourcingofoperating
andcapitalrequirements;
• overseeingandmonitoringorganisationalperformanceandthe
achievementoftheGroup’sstrategicgoalsandobjectives,including
acquisitionsanddivestments;
• identificationandappointment,andremovaloftheChiefExecutive
OfficeroftheGroup;
• monitoringfinancialperformanceincludingapprovaloftheannual
andhalf-yearfinancialreportsandliaisonwiththeCompany’s
auditor;
• appointmentandassessmentoftheperformanceofanyoffice
holdersoftheGroup;
• ensuringthereareeffectivemanagementprocessesinplaceand
approvingmajorcorporateinitiatives;
• enhancingandprotectingthereputationoftheorganisation;
• ensuringthesignificantrisksfacingtheGrouphavebeenidentified
andappropriateandadequatecontrol,monitoringandreporting
mechanismsareinplace;and
• reportingtoshareholders.
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Code of conduct
DirectorsarerequiredtocomplywiththeCompany’sDirectors’codeof
conduct.ThecodeofconductrequiresthataDirector:
• mustacthonestly,ingoodfaithandinthebestinterestsofthe
Groupasawhole;
• hasadutytouseduecareanddiligenceinfulfillingthefunctionsof
officeandexercisingpowersattachedtothatoffice;
• mustusepowersofofficeforaproperpurpose,inthebestinterests
oftheGroupasawhole;
• mustrecognisethattheprimaryresponsibilityistotheCompany’s
shareholdersasawholebutshould,whereappropriate,haveregard
fortheinterestsofallstakeholdersoftheGroup;
• mustnotmakeimproperuseofinformationacquiredasaDirector;
• mustnottakeimproperadvantageofthepowersofaDirector;
• mustnotallowpersonalinterest,ortheinterestsofanyassociate
person,toconflictwiththeinterestsoftheGroup;
• hasanobligationtobeindependentinjudgementandactionsand
totakeallreasonablestepstobesatisfiedastothesoundnessofall
decisionstakenbytheboard;
• acknowledgesandacceptsthatconfidentialinformationreceived
inthecourseofhisorherdutiesasaDirectorremainstheproperty
oftheGroupfromwhichitwasobtainedanditisimproperto
discloseit,orallowittobedisclosed,unlessthatdisclosurehasbeen
authorisedbythatcompany,orpersonfromwhomtheinformation
isprovided,orisrequiredbylaw;
• shouldnotengageinconductlikelytobringdiscredituponthe
Group;and
• hasanobligation,atalltimes,tocomplywiththespirit,aswellas
theletter,ofthelawandwiththeprinciplesoftheDirectors’codeof
conduct.
Directors’ independence
Inordertobeconsideredindependent,aDirectormustbeanon-
executiveand:
• notasubstantialshareholderoftheCompanyoranofficerof,or
otherwiseassociateddirectlywith,asubstantialshareholderofthe
Company;
• notanofficeroftheCompanyorarelatedentity,ornotbeena
Directorafterceasingtoholdsuchoffice,withinthelastthreeyears;
• notbeenaprincipalofaprofessionaladvisortotheGroupwithinthe
lastthreeyears;
• notbeenamaterialsupplierorcustomeroftheCompanyora
relatedentity,oranofficeroforotherwiseassociatedwithamaterial
supplierorcustomer;
• musthavenomaterialcontractualrelationshipwiththeCompanyor
arelatedentityotherthanasaDirectoroftheGroup;or
• notbeenontheBoardforaperiodthatmaybeperceivedto
interferemateriallywiththeDirector’sabilitytoactinthebest
interests of the Group.
Materialityforthesepurposesisdeterminedonbothquantitative
andqualitativebases,withanamountover5%consideredmaterialin
respectofthequantitativebasis.
TheChairmanoftheBoard,MrGrahamJones,isconsideredan
independentnon-executiveDirector.
Board members
DetailsofthemembersoftheBoard,theirexperience,
expertise,qualificationsandspecialresponsibilitiesareset
outunder‘InformationonDirectors’intheDirectors’Report.
Term of office
TheCompany’sConstitutionspecifiesthatallDirectorsappointedto
eitherfillacasualvacancyorasanadditionalDirectorwillholdoffice
untilthenextannualgeneralmeeting(AGM)atwhichtheDirector,
ifeligible,mayofferhimselforherselfforre-election.TheCompany’s
ConstitutionalsoprovidesforDirectors(excepttheManagingDirector)to
retirebyrotation,withaDirectorhavingtoretireattheconclusionofthe
thirdAGMafterheorshewaslastelected.Whereeligible,aDirectormay
standforre-election.
Onattainingtheageof70yearsaDirectorwillretire,byagreement,at
thenextAGMandwillnotseekre-election.
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Chairman and Chief Executive Officer
TheChairmanisresponsibleforleadingtheBoard,andensuringthat
theBoardactivitiesareorganisedandefficientlyconducted.TheChief
ExecutiveOfficerisresponsibleforimplementingtheGroup’sstrategies
and policies.
TheGroup’scorporategovernancepracticesrequirethattheserolesare
undertakenbyseparatepeople.
Commitment
ThenumberofBoardandCommitteemeetingsheldduringtheyearand
thenumberofmeetingsattendedbyeachoftheDirectorsissetoutin
theDirectors’Report.
Non-executiveDirectorsareexpectedtospendatleast36daysperyear
preparingforandattendingBoardandCommitteemeetings.
Conflict of interests
Dealingswithrelatedcompaniesaresetoutinthefinancialreport.
Independent professional advice
DirectorsandBoardCommitteeshavetheright,inconnectionwiththeir
dutiesandresponsibilities,toseekindependentprofessionaladviceat
theGroup’sexpense.PriorwrittenapprovaloftheChairmanisrequired,
butthiswillnotbeunreasonablywithheld.
2. Corporate reporting
TheChiefExecutiveOfficerandChiefFinancialOfficeroftheGrouphave
madethefollowingcertificationstotheBoard:
• thattheGroup’sfinancialreportsarecompleteandpresentatrue
andfairview,inallmaterialrespects,ofthefinancialconditionand
operationalresultsofthecompanyandtheGroup;and
• thattheabovestatementisfoundedonsoundsystemsofinternal
controlandriskmanagementwhichimplementsthepolicies
adoptedbytheboardandthattheGroup’sriskmanagementand
internalcontrolsareoperatingeffectivelyinallmaterialrespects.
TheGroupfirstadoptedthisreportingstructuretheyearended31
December2003.
3. Board committees
TheBoardhasestablishedanAuditCommitteewhichhasdefined
responsibilities.TheCommitteestructureandmembershipisreviewed
onanannualbasis.Apolicyofrotationofcommitteemembersapplies.
AllmattersdeterminedbytheCommitteearesubmittedtothefull
boardasrecommendationsforBoarddecision.InadditiontheBoard
seekstoensurethatthemembershipatanypointintimerepresentsan
appropriatebalancebetweenDirectorswithexperienceandknowledge
oftheCompanyandDirectorswithanexternalorfreshperspective.
Atthedateofthisreport,theAuditCommitteeconsistsofthefollowing
Directors:MrBrianBickmore(CommitteeChairman),MrChristopher
Bregenhoj,MrGrahamJones,MrDavidStandenandMrMichaelEgan,as
CompanySecretary.
ThemainresponsibilitiesoftheAuditCommitteeareto:
• reviewandreporttotheBoardontheannualandhalf-yearfinancial
reports;
• assisttheBoardinreviewingtheeffectivenessoftheGroup’sinternal
controlenvironmentcovering:
• effectivenessandefficiencyofoperations
• reliabilityoffinancialreporting
• compliancewithapplicablelawsandregulations;
• overseetheeffectiveoperationofriskmanagement;and
• recommendtotheBoardtheappointment,removalandremuneration
oftheexternalauditor,andreviewthetermsofhisengagement,and
thescopeandqualityoftheaudit.
Infulfillingitsresponsibilities,theAuditCommitteeseeksregularreports
from management and the external auditor.
Italsomeetswiththeexternalauditoratleasttwiceayearandatother
times as appropriate. The external auditor has a clear line of direct
communicationatanytimetoeithertheCommitteeChairmanofthe
AuditCommitteeortheChairmanoftheBoard.
TheAuditCommitteehasauthority,withinthescopeofits
responsibilities,toseekanyinformationitrequiresfromanyemployee
or external party.
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ConsideringthesizeoftheCompany,thefullBoardhasresolvedthat
thefunctionsandresponsibilitiesoftheremunerationandnomination
committeeswill,forthetimebeing,beundertakenbythefullBoard.The
responsibilitiesoftheBoardinrespectofthesefunctionsare:
• assessthenecessaryanddesirablecompetencies
ofBoardmembers;
• reviewtheBoard’ssuccessionplans;
• evaluationoftheBoard’sperformanceandremuneration;
• makerecommendationsfortheappointmentandremovalof
Directors;
• reviewexecutiveremunerationandincentivepolicies;
• reviewremunerationpackagesofseniormanagement;
• reviewrecruitment,retentionandterminationpolicies
andproceduresforseniormanagement;and
• reviewstaffincentiveandsuperannuationschemes.
TheBoardiscurrentlyundertakinganevaluationofitsperformance.
4. Risk assessment and management
TheBoardisresponsibleforensuringthereareadequatepoliciesin
relationtoriskoversightandmanagement,andinternalcontrolsystems.
TheGroup’spoliciesaredesignedtoensurestrategic,operational,legal,
reputationandfinancialrisksareidentified,assessed,addressedand
monitoredtoenableachievementoftheGroup’sbusinessobjectives.
TheGroup’sriskmanagementpolicyandprocessesaimto:
• ensurethatrisksarisingfrombusinessstrategiesandactivitiesare
identifiedandprioritised;
• theboardandmanagementhavedeterminedthelevelofrisks
acceptabletotheGroup,includingacceptablerisksinvolvedinthe
Group’sstrategicplan;
• riskmitigationactivitiesaredesigned,reviewedandimplemented
toreduce,orotherwisemanagerisksatlevelsthatareacceptableto
theBoard;
• ongoingmonitoringactivitiesareconductedperiodicallytoreassess
riskandtheeffectivenessofcontrolstomanagerisk;and
• theBoardreceivesperiodicreportscoveringriskmanagement.
TheBoardhasresolvedtoestablishandmaintaingovernanceprocesses
andobtainassurancesconcerningriskmanagementandcontrol
processes.Managementhavebeenchargedwiththeimplementationof
theriskmanagementandcontrolprocesses.Controlprocessesmustbe
designed to ensure:
• financialandoperationalinformationisreliableandpossesses
integrity;
• operationsareperformedefficientlyandachieve
effectiveresults;
• assetsaresafeguarded;and
• actionsanddecisionsoftheorganisationareincompliancewith
laws,regulationsandcontracts.
TheAuditCommitteeisresponsibleforensuringtheadequacyand
effectivenessofcontrolprocesses.
Detailedcontrolprocedurescovermanagementaccounting,financial
reporting,projectappraisal,environment,occupationalhealthand
safety,complianceandotherriskmanagementissues.Eachdepartment
reportsonamonthlybasistotheBoardonthekeybusinessriskswithin
thatdepartment.Riskreportingincludespastperformancewithinthe
department,andthecurrentandfutureriskstheyface.
TheBoardrequiresthateachmajorproposalsubmittedtotheBoard
fordecisionisaccompaniedbyacomprehensiveriskassessmentand,
whererequired,management’sproposedriskmitigationstrategies.
5. Directors’ share trading
ThepurposeofthispolicyistoassistDirectorsandseniormanagersto
avoidconductthatmightbeconsideredtobeacriminalactof“insider
trading”,andtoestablishappropriaterulesfortradingintheCompany’s
shares.Forthepurposesofthispolicy,tradingintheCompany’sshares
wouldalsoextendtotradinginothersecuritiesissuedbytheCompany
includingoptions.ThispolicyappliestotradingintheCompany’sshares
byDirectors,bothexecutiveandnon-executive,toseniormanagersand
totradingbytheirfamilymembersandassociates.
TheBoardtakesthematterofthepurchaseandsaleofsharesinthe
Companyseriouslyandexpectsfullcompliancewiththispolicy.
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Directorsandseniormanagersmustnotbuyorsellsharesinthe
Companywhentheyareinpossessionofpricesensitiveinformation
whichisnotgenerallyavailabletothemarket.Publiccompaniesare
requiredtocontinuouslydisclosepricesensitiveinformation,sothere
isnoparticularperiodoftimeinwhichitcanbeautomaticallyassumed
thatitissafetotradeintheCompany’sshares.Theonlypermissibletime
foraDirectororseniormanagertobuyorselltheCompany’ssharesis
whenheorsheisnotinpossessionofpricesensitiveinformation.
Withoutlimitingthisprinciple,thefollowingruleshavebeenestablished
toassistDirectorsandseniormanagersinfulfillingtheirobligations:
• Directorsandseniormanagersmustnotengageinshortterm
trading;
• thereisanabsoluteprohibitiononanytradingofsharesinthetwo
monthperiodbeforetheannouncementofthefullyearresultsor,
ifshorter,theperiodfromtherelevantfinancialyearenduptoand
includingthetimeoftheannouncement;
• thereisanabsoluteprohibitiononanytradingofsharesinthetwo
monthperiodbeforetheannouncementofthehalf-yearresultsor,if
shorter,theperiodfromtherelevantfinancialperiodenduptoand
includingthetimeoftheannouncement;
• thereisanabsoluteprohibitiononanytradingofsharesinthetwo
monthperiodbeforetheAnnualGeneralMeetingorotherGeneral
MeetingoftheCompany;
• thereisanabsoluteprohibitiononanytradingofsharesintheone
monthperiodbeforetheannouncementofanyquarterlyresultsor,
ifshorter,theperiodfromtherelevantfinancialperiodendupto
andincludingthetimeoftheannouncement;
• aDirectororseniormanagermustnotdealinanyshares
oftheCompanyatanytimewhenheorsheisinpossessionof
unpublishedprice-sensitiveinformationinrelationtothoseshares,
orwhenithasbecomereasonablyprobablethatsuchinformation
willberequired:
• tobedisclosedtothemarketundertheListingRules
ofASX(orotherstockexchangeonwhichtheCompanyis
listed);or
• otherwisewhereclearancetotradehasnotbeengivenunder
thispolicy;
• aDirectororseniormanagermustnottradeintheCompany’sshares
withoutadvisingtheChairman(orotherpersondesignatedforthis
purpose)inadvanceandreceivingwrittenclearancebeforeany
dealing(includingmarketdealing)intheCompany’sshares.Inhis
orherowncase,theChairmanmustadvisetheBoardinadvanceat
aBoardmeeting,oradviseanotherdesignatedDirector,andreceive
clearancefromtheBoardordesignatedDirector,asappropriate;
• aDirectororseniormanagerwillnotbegivenclearanceunderthis
policy to deal in any securities during:
•aclosedperiod;
•anyperiodwhenthereexistsanymatterwhichconstitutes
unpublishedprice-sensitiveinformationinrelationtothe
Company’ssecurities(whetherornottheDirectororsenior
managerhasknowledgeofsuchmatter)andtheproposed
dealingwould(ifpermitted)takeplaceafterthetimewhenit
hasbecomereasonablyprobablethatanannouncementwillbe
requiredinrelationtothatmatter;or
•anyperiodwhenthepersonresponsiblefortheclearance
otherwisehasreasontobelievethattheproposeddealingisin
breachofthispolicy;
• aDirectororseniormanagermustseektoprohibitdealingsonhisor
herbehalf(asrequiredbythispolicy)byaninvestmentmanageror
otherpartyconnectedwiththeDirectororseniormanager;and
• aDirectororseniormanagermustadvisetheCompanySecretary
inwritingofthedetailsofanycompletedtransactionswithin3
businessdaysofthetransactionintheformatrequestedbyASX.The
CompanySecretarywillberesponsibleformaintainingarecordof
disclosures.
ThegrantofoptionstoaDirectororseniormanagerunderanemployee
shareoptionplanmaybepermittedifsuchagrantcouldnotbe
reasonablymadeatanothertime.
6. Shareholder communication and Continuous Disclosure
Thispolicyaimstoensureanypricesensitiveinformationisdisclosed
tothemarketpriortoanyotherpersonorgroupsofpersons.The
policyaimstoensureshareholdersandthemarketisprovidedwith
sufficientinformationtomakeinformeddecisionsaboutinvestmentsin
oOh!mediaGroupLimited.
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TheCompanypromoteseffectivecommunicationwithshareholdersand
themarketthrough:
• theAnnualandHalf-yearlyReports;
• disclosuresmadetoASXundertheContinuousDisclosureregime;
• noticesandexplanatorymemorandaoftheAnnualGeneralMeeting
andanyExtraordinaryGeneralMeetings;
• theAGM,wheretheauditorwillbeavailabletoanswerquestions
abouttheaudit;
• lettersfromtheChairmanandCEO;and
• thewebsitesofGroupcompanies.
The disclosure policy and authorisation process are designed to ensure
Companyannouncements:
• aremadeinatimelymanner;
• arefactual;
• donotomitmaterialinformation;and
• areexpressedinaclearandobjectivemanner.
7. The environment, health and safety management system (EHSMS)
oOh!mediaGroupLimitedrecognisestheimportanceofenvironmental
andoccupationalhealthandsafety(OH&S)issuesandiscommitted
tothehighestlevelsofperformance.Tohelpmeetthisobjectivethe
EHSMSwasestablishedtofacilitatethesystematicidentificationof
environmentalandOH&Sissuesandtoensuretheyaremanagedina
structured manner.
ThisoperatesundertheEHSMSto:
• monitoritscompliancewithallrelevantlegislation;
• continuallyassessandimprovetheimpactofitsoperations
ontheenvironment;
• encourageemployeestoactivelyparticipateinthe
managementofenvironmentalandOH&Sissues;
• workwithtradeassociationsrepresentingtheentity’s
businessestoraisestandards;
• useenergyandotherresourcesefficiently;and
• encouragetheadoptionofsimilarstandardsbytheentity’s
principalsuppliers,contractorsanddistributors.
Informationoncompliancewithsignificantenvironmentalregulationsis
setoutintheDirectors’Report.
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8. Compliance with ASX’s Corporate Governance Principles and Recommendations (Second Edition Corporate Governance Guidelines)
AsummaryoftheextenttowhichtheCompanyhasfollowedtheCorporateGovernancePrinciplesandRecommendationsissuedbyASXCorporate
GovernanceCouncilissetoutinthetablebelow.
Corporate Governance recommendations Extent of compliance
1 Lay solid foundations for management and oversight
1.1 Companiesshouldestablishthefunctionsreservedtotheboardandthosedelegatedtoseniorexecutivesanddisclosethose functions
Complies
1.2 Companiesshoulddisclosetheprocessforevaluatingseniorexecutives
Complies
1.3 CompaniesshouldprovidetheinformationindicatedintheGuidetoReportingonPrinciple1
Complies
2 Structure the board to add value
2.1 Amajorityoftheboardshouldbeindependentdirectors TheCompanyhasamajorityofnon-independentDirectors
2.2 Thechairshouldbeanindependentdirector Complies
2.3 Therolesofchairandchiefexecutiveofficershouldnotbeexercisedbythesameindividual
Complies
2.4 Theboardshouldestablishanominationcommittee TheCompanyhasajointnominationandremunerationcommittee
2.5 Companiesshoulddisclosetheprocessforevaluatingtheperformanceoftheboard,itscommitteesandindividualdirectors
Complies
2.6 CompaniesshouldprovidetheinformationindicatedintheGuidetoReportingonPrinciple2
Complies
3 Promote ethical and responsible decision-making
3.1 Companiesshouldestablishacodeofconductanddisclosethe code or a summary of the code as to:
•thepracticesnecessarytomaintainconfidenceinthecompany’sintegrity
•thepracticesnecessarytotakeintoaccounttheirlegalobligationsandthereasonableexpectationsoftheirstakeholders
•theresponsibilityandaccountabilityofindividualsforreportingandinvestigatingreportsofunethicalpractices
Complies
3.2 Companiesshouldestablishapolicyconcerningtradingincompanysecuritiesbydirectors,seniorexecutivesandemployees,anddisclosethepolicyorasummaryofthatpolicy
Complies
3.3 CompaniesshouldprovidetheinformationindicatedintheGuidetoReportingonPrinciple3
Complies
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Corporate Governance recommendations Extent of compliance
4 Safeguard integrity in financial reporting
4.1 Theboardshouldestablishanauditcommittee Complies
4.2 Theauditcommitteeshouldbestructuredsothatit:
•consistsonlyofnon-executivedirectors
•consistsofamajorityofindependentdirectors
•ischairedbyanindependentchair,whoisnotchairoftheboard
•hasatleastthreemembers
TheCompany’sAuditCommitteeincludesanexecutiveDirectorandhasanequalrepresentationofindependentandnon-independentDirectors.WiththisexceptiontheCompanyComplies
4.3 Theauditcommitteeshouldhaveaformalcharter Complies
4.4 CompaniesshouldprovidetheinformationindicatedintheGuidetoReportingonPrinciple4
Complies
5 Make timely and balanced disclosure
5.1 CompaniesshouldestablishwrittenpoliciesdesignedtoensurecompliancewithASXListingRuledisclosurerequirementsandtoensureaccountabilityataseniorexecutivelevelforthatcomplianceanddisclosethosepoliciesor a summary of those policies
Complies
5.2 CompaniesshouldprovidetheinformationindicatedinGuidetoReportingonPrinciple5
Complies
6 Respect the rights of shareholders
6.1 Companiesshoulddesignacommunicationspolicyforpromotingeffectivecommunicationwithshareholdersandencouraging their participation at general meetings and disclose their policy or a summary of that policy
Complies
6.2 CompaniesshouldprovidetheinformationindicatedintheGuidetoReportingonPrinciple6
Complies
7 Recognise and manage risk
7.1 Companiesshouldestablishpoliciesfortheoversightandmanagementofmaterialbusinessrisksanddiscloseasummary of those practices
Complies
7.2 Theboardshouldrequiremanagementtodesignandimplementtheriskmanagementandinternalcontrolsystemtomanagethecompany’smaterialbusinessrisksandreporttoitonwhetherthoserisksarebeingmanagedeffectively.Theboardshoulddisclosethatmanagementhasreportedtoitastotheeffectivenessofthecompany’smanagementofitsmaterialbusinessrisks
Complies
7.3 Theboardshoulddisclosewhetherithasreceivedassurancefromthechiefexecutiveofficer(orequivalent)andthechieffinancialofficer(orequivalent)thatthedeclarationprovidedinaccordancewithsection295AoftheCorporationsActisfoundedonasoundsystemofriskmanagementandinternalcontrolandthatthesystemisoperatingeffectivelyinallmaterialrespectsinrelationtofinancialreportingrisks
Complies
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Corporate Governance recommendations Extent of compliance
7.4 CompaniesshouldprovidetheinformationindicatedinGuidetoReportingonPrinciple7
Complies
8 Remunerate fairly and responsibly
8.1 Theboardshouldestablisharemunerationcommittee TheCompany’shasajointnominationandremunerationcommittee
8.2 Companiesshouldclearlydistinguishthestructureofnon-executivedirectors’remunerationfromthatofexecutivedirectorsandseniorexecutives
Complies
8.3 CompaniesshouldprovidetheinformationintheGuidetoReportingonPrinciple8
Complies
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Statement of Comprehensive Incomefortheyearended31December2010
Consolidated
Notes2010
$’0002009
$’000
Revenuefromcontinuingoperations 3 109,700 86,040
Otherincome 3 30 8
Costsofmediasitesandproduction (64,129) (49,853)
EmployeesandDirectorscosts (16,253) (12,911)
Insurance (152) (127)
Propertyrelatedcosts (870) (738)
Depreciationandamortisation 4 (4,306) (3,779)
Legalandprofessionalfees (1,117) (1,729)
Sharebasedpaymentsexpense 4 (422) (41)
Lossondisposalofnon-currentassets 4 - (898)
Otherexpensesfromordinaryactivities (5,640) (4,818)
Operating profit for the year 16,841 11,154
Borrowingcosts 4 (5,659) (4,669)
Profit before income tax for the year 4 11,182 6,485
Incometax(expense) 5 (4,154) (1,594)
Profit from continuing operations attributable to the members of oOh!media Group Limited for the year 7,028 4,891
Othercomprehensiveincome - -
Total comprehensive income for the year 7,028 4,891
Earnings per share for profit from continuing operationsattributable to the ordinary equity holders of the Company
Basicearningspershare 31 1.8 cents 1.3cents
Dilutedearningspershare 31 1.8 cents 1.3cents
Earnings per share for profit attributable to the ordinary equity holders of the Company
Basicearningspershare 31 1.8 cents 1.3cents
Dilutedearningspershare 31 1.8 cents 1.3cents
Theabovestatementofcomprehensiveincomeshouldbereadinconjunctionwiththeaccompanyingnotes.
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Balance Sheetasat31December2010
Consolidated
Notes2010
$’0002009
$’000
Current Assets
Cashandcashequivalents 7 6,525 307
Tradeandotherreceivables 8 23,949 19,716
Inventories 9 92 39
Total Current Assets 30,566 20,062
Non-Current Assets
Property,plantandequipment 10 19,788 19,443
Intangibleassets 11 99,016 97,853
Otherfinancialassets 12 413 516
Total Non-Current Assets 119,217 117,812
Total Assets 149,783 137,874
Current Liabilities
Tradeandotherpayables 14 15,318 11,217
DeferredconsiderationfortheacquisitionofSportsandOutdoorMediaPtyLtd 28 16,878 4,868
Borrowings 15 4,812 10,049
Currenttaxliabilities 2,137 1,833
Provisions 16 452 371
Total Current Liabilities 39,597 28,338
Non-Current Liabilities
DeferredconsiderationfortheacquisitionofSportsandOutdoorMediaPtyLtd 28 - 15,909
Borrowings 17 21,247 25,516
Provisions 18 755 575
Deferredtaxliabilities 19 1,093 446
Total Non-Current Liabilities 23,095 42,446
Total Liabilities 62,692 70,784
Net Assets 87,091 67,090
Equity
Equity attributable to equity holders of the parent entity
Contributedequity-sharecapital 20 79,547 66,996
Reserves 20 422 -
Retainedprofits 7,122 94
Total Equity 87,091 67,090
Theabovebalancesheetshouldbereadinconjunctionwiththeaccompanyingnotes.
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Statement of Cash Flowsfortheyearended31December2010
Consolidated
Notes2010
$’0002009
$’000
Cash flows from operating activities
Receiptsfromcustomers 107,123 85,003
Paymentstoemployeesandsuppliers (85,498) (70,057)
Interestreceived 30 8
Interest costs paid (4,518) (4,436)
Income tax paid (3,105) (821)
Net cash inflow from operating activities 23 14,032 9,697
Cash flows from investing activities
PaymentsfortheacquisitionofSportsandOutdoorMediaPtyLtd 28 (3,950) (1,200)
Paymentsfortheacquisitionofcontrolledentitiesandbusinesses,netofcashacquired 28 (1,650) (246)
Paymentsforplantandequipment (3,711) (2,753)
Paymentsforintangibleassets (317) (542)
Proceedsfromsaleofproperty,plantandequipment - 45
Net cash (outflow) from investing activities (9,628) (4,696)
Cash flows from financing activities
Proceedsfromissueofshares,netofissuecosts 11,361 -
Proceedsfromborrowings 375 -
Repaymentofborrowings (2,800) (2,750)
Repaymentoffinanceleases (1,967) (1,660)
Net cash inflow/(outflow) from financing activities 6,969 (4,410)
Net increase in cash and cash equivalents held 11,373 591
Cash and cash equivalents at the beginning of the financial year (4,999) (5,590)
Cash and cash equivalents at the end of the financial year 7 6,374 (4,999)
Theabovestatementofcashflowsshouldbereadinconjunctionwiththeaccompanyingnotes.
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Statement of Changes in Equityfortheyearended31December2010
Consolidated2010
Contributed equity-
Share capital$’000
Reserves-Optionreserve
$’000
Retained Earnings
$’000Total
$’000
Total equity at 1 January 66,996 - 94 67,090
Profitandtotalcomprehensiveincomefortheyear - - 7,028 7,028
Total comprehensive income for the year - - 7,028 7,028
Transactions with equity holders in their capacity as equity holders
Contributionsofequity,netoftransactioncosts 12,551 - - 12,551
Sharebasedpaymentsexpense-options - 422 - 422
Total of transactions with equity holders intheir capacity as equity holders 12,551 422 - 12,973
Total equity at 31 December 79,547 422 7,122 87,091
Theabovestatementofchangesinequityshouldbereadinconjunctionwiththeaccompanyingnotes.
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Consolidated2009
Contributed equity-
Share capital$’000
Reserves-Optionreserve
$’000
(Accumulatedlosses)/
Retained Earnings
$’000Total
$’000
Total equity at 1 January 67,001 1,226 (6,023) 62,204
Profitandtotalcomprehensiveincomefortheyear - - 4,891 4,891
Total comprehensive income for the year - - 4,891 4,891
Transactions with equity holders in their capacity as equity holders
Contributionsofequity,netoftransactioncosts (46) - - (46)
Sharebasedpaymentsexpense-shares 41 - - 41
Optionslapsed - (1,226) 1,226 -
Total of transactions with equity holders intheir capacity as equity holders (5) (1,226) 1,226 (5)
Total equity at 31 December 66,996 - 94 67,090
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Notes to the Financial Statements31December2010
1 Summary of Significant Accounting Policies
ThisgeneralpurposefinancialreporthasbeenpreparedinaccordancewithAustralianequivalentstoInternationalFinancialReportingStandards(AIFRS),otherauthoritativepronouncementsoftheAustralianAccountingStandardsBoard,AustralianAccountingInterpretationsandtheCorporationsAct2001.
Thisreportincorporatestheassetsandliabilitiesofallof theentitiescontrolledbyoOh!mediaGroupLimited(the‘Company’or‘parententity’)asat31December2010andtheresultsofallcontrolledentitiesfortheyearthenended.oOh!mediaGroupLimitedanditscontrolled entities together are referred to in this financial report as the‘consolidatedentity’or‘Group’.oOh!mediaGroupLimitedisalistedpublicCompany,incorporatedanddomiciledinAustralia.
(a) Basis of preparation
(i)CompliancewithAIFRS
AustralianAccountingStandardsincludeAIFRS.CompliancewithAIFRSensuresthattheconsolidatedandparentCompanyfinancialstatementsandaccompanyingnotescomplywithInternationalFinancialReportingStandards(IFRS).
ThefinancialstatementsarepreparedinAustraliandollarsinaccordancewiththehistoricalcostconvention.
TheGrouphasrecordedaprofitof$7,028,000forthefinancialyearending31December2010(2009:$4,891,000),hasgeneratedpositiveoperatingcashflowsof$14,032,000(2009:$9,697,000)andatthatdatehasanetcurrentliabilitypositionof$9,031,000(2009:$8,276,000).TheDirectorsareoftheopinionthattheGroupwillbeabletofundfutureoperations through profits arising from continuing operations and anticipatesufficientoperatingcashflowstobeabletomeetworkingcapitalrequirements.TheGroupalsocontinuestohavethesupportoffundingfacilities(seenote15)andnoassetsarelikelytoberealisedforan amount less than the amount recorded in the financial report as at 31December2010.
(ii)Comparativefigures
WhererequiredbyAccountingStandards,comparativefigureshavebeenadjustedtoconformtochangesinpresentationforthecurrentfinancial year. (b) New Accounting Standards and Interpretations
(i) Changes in accounting policy and disclosures
Theaccountingpoliciesadoptedareconsistentwiththoseofthepreviousfinancialyearexceptasfollows:
TheGrouphasadoptedthefollowingnewandamendedAustralianAccountingStandardsandAASBInterpretationsasof1January2010:
AASB 127 Consolidated and Separate Financial Statements (Amended)
AASB127(amended)requiresthatachangeintheownershipinterestofasubsidiary(withoutachangeincontrol)istobeaccountedforas
atransactionwithownersintheircapacityasowners.Thereforesuchtransactionswillnolongergiverisetogoodwill,norwilltheygiverisetoagainorlossinthestatementofcomprehensiveincome.FurthermoretherevisedStandardchangestheaccountingforlossesincurredbyapartiallyownedsubsidiaryaswellasthelossofcontrolofasubsidiary.ThechangeAASB127(amended)willaffectfutureacquisitions,changesin,andlossofcontrolof,subsidiariesandtransactionswithnon-controlling interests.
ThisamendedStandardhadnoimpactonreportedresults.
(ii) Accounting standards and interpretations issued but not yet effective
AnumberofrevisedaccountingstandardsandinterpretationshavebeenissuedbytheAASBwhicharenotyeteffective.TheGroup’sassessmentoftheimpactofthesenewstandardsandinterpretationsissetoutbelow.
AASB 9 Financial Instruments
TherevisedAASB9incorporatestheIASB’scompletedworkonPhase1ofitsprojecttoreplaceIAS39FinancialInstruments:RecognitionandMeasurement(AASB139FinancialInstruments:RecognitionandMeasurement)ontheclassificationandmeasurementoffinancialassetsandfinancialliabilities.Inaddition,theIASBcompleteditsprojectonderecognition of financial instruments.
TheStandardincludesrequirementsfortheclassificationandmeasurementoffinancialinstruments,aswellasrecognitionandderecognitionrequirementsforfinancialinstruments.AASB9(issuedin2009)onlyincludedrequirementsfortheclassificationandmeasurementoffinancialassetsresultingfromthefirstpartofPhase1oftheIASB’sprojecttoreplaceIAS39(AASB139).
TheGroupwillapplytheamendedstandardfom1January2013Howeverthereisnotexpectedtobeanymaterialimpactonanyamounts recognised in the financial statements.
AASB 2010-3 Amendments to Australian Accounting Standards arising from the Annual Improvements Project , AASB 2010-4 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project and AASB 2010-5 Amendments to Australian Accounting Standards (effective from 1 July 2010/1 January 2011)
InJune2010,theAASBmadeanumberofamendmentstoAustralianAccountingStandardsasaresultoftheIASB’sannualimprovementsproject.TheGroupwillapplytheamendmentsfrom1January2011.Itdoesnotexpectthatanyadjustmentswillbenecessaryasaresultofapplyingtherevisedrules.
AASB 2010-5 Amendments to Australian Accounting Standards (effective from January 2011)
InOctober2010,theAASBmadeanumberofamendmentstoAustralianAccountingStandards.TheGroupwillapplytheamendmentsfrom1January2011.Itdoesnotexpectthatanyadjustmentswillbenecessaryasaresultofapplyingtherevisedrules.
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Notes to the Financial Statements31December2010
(c) Basis of consolidation
The consolidated financial statements comprise the financial statements ofoOh!mediaGroupLimitedanditscontrolledentitiesasoutlinedinnote28(‘theGroup’)asat31Decembereachyear.
SubsidiariesareallthoseentitiesoverwhichtheGrouphasthepowertogovernthefinancialandoperatingpoliciessoastoobtainbenefitsfromtheiractivities.Theexistenceandeffectofpotentialvotingrightsthatarecurrentlyexercisableorconvertibleareconsideredwhenassessingwhetheragroupcontrolsanotherentity.
The financial statements of the controlled entities are prepared for thesamereportingperiodastheparentcompany,usingconsistentaccounting policies.
Inpreparingtheconsolidatedfinancialstatements,allintercompanybalancesandtransactions,incomeandexpensesandprofitandlossesresultingfromintra-Grouptransactionshavebeeneliminatedinfull.
ControlledentitiesarefullyconsolidatedfromthedateonwhichcontrolisobtainedbytheGroupandceasetobeconsolidatedfromthedateonwhichcontrolistransferredoutoftheGroup.
InvestmentsincontrolledentitiesheldbyoOh!mediaGroupLimitedareaccounted for at cost in the separate financial statements of the parent entity.
Theacquisitionofsubsidiariesisaccountedforusingthepurchasemethodofaccounting.Thepurchasemethodofaccountinginvolvesallocatingthecostofthebusinesscombinationtothefairvalueoftheassetsacquiredandtheliabilitiesandcontingentliabilitiesassumedatthedateofacquisition(seenote1(z)).
(d) Operating segments - see note 2
Anoperatingsegmentisacomponentofanentitythatengagesinbusinessactivitiesfromwhichitmayearnrevenuesandincurexpenses(includingrevenuesandexpensesrelatingtotransactionswithothercomponentsofthesameentity),whoseoperatingresultsareregularlyreviewedbytheentity’schiefoperatingdecisionmakertomakedecisionsaboutresourcestobeallocatedtothesegmentandassessitsperformanceandforwhichdiscretefinancialinformationisavailable.
Operatingsegmentshavebeenidentifiedbasedontheinformationprovidedtothechiefoperatingdecisionmakers–beingtheChiefExecutiveOfficer.
TheGroupaggregatestwoormoreoperatingsegmentswhentheyhavesimilareconomiccharacteristics,andthesegmentsaresimilarineachofthefollowingrespects:
• Natureoftheproductsandservices;
• Natureoftheproductionprocesses;
• Typeorclassofcustomerfortheproductsandservices;
• Methodsusedtodistributetheproductsorprovidetheservices;and ifapplicable
• Natureoftheregulatoryenvironment.
(e) Foreign currency translation
(i) Functionalandpresentationcurrency
ItemsincludedinthefinancialstatementsofeachoftheGroup’sentities are measured using the currency of the primary economic environmentinwhichtheentityoperates(‘thefunctionalcurrency’).TheconsolidatedfinancialstatementsarepresentedinAustraliandollars,whichisoOh!mediaGroupLimited’sfunctionalandpresentation currency.
(ii) Transactionsandbalances
ForeigncurrencytransactionsareinitiallytranslatedintoAustraliancurrency at the rate of exchange at the date of the transaction. AmountspayableandreceivableinforeigncurrenciesaretranslatedtoAustraliancurrencyattheratesofexchangeatthedateofthebalancesheet.Resultingexchangedifferencesarebroughttoaccount in determining the profit or loss for the period.
(f) Revenue recognition
Revenueismeasuredatthefairvalueoftheconsiderationreceivedorreceivable.Amountsdisclosedasrevenuearenetofreturns,allowancesandtaxespaid.Revenueisrecognisedforthemajorbusinessactivitiesasfollows:
(i) Mediabusiness
Revenuefortheplacementofadvertisingisrecognisedforthespecificperiodtheadvertisementisdisplayed.Revenueformediaproductionworkisrecognisedoncompletionoftheassignment.
(ii) Other
Interestrevenuesareaccruedovertheperiodduringwhichtheyareearned.
(g) Income tax
Theincometaxexpenseorcreditfortheperiodisthetaxpayableonthecurrentperiod’staxableincomebasedonthenationalincometaxrateforeachjurisdictionadjustedbychangesindeferredtaxassetsandliabilitiesattributabletotemporarydifferencesbetweenthetaxbasesofassetsandliabilitiesandtheircarryingamountsinthefinancialstatements,andtounusedtaxlosses.
Deferredtaxassetsandliabilitiesarerecognisedfortemporarydifferencesatthetaxratesexpectedtoapplywhentheassetsarerecoveredorliabilitiesaresettled,basedonthosetaxrateswhichareenactedorsubstantivelyenactedforeachjurisdiction.Therelevanttaxratesareappliedtothecumulativeamountsofdeductibleandtaxabletemporarydifferencestomeasurethedeferredtaxassetorliability.
Deferredtaxassetsarerecognisedfordeductibletemporarydifferencesandunusedtaxlossesonlyifitisprobablethatfuturetaxableamountswillbeavailabletoutilisethosetemporarydifferencesandlosses.
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Notes to the Financial Statements31December2010
Deferredtaxassetsanddeferredtaxliabilitiesareoffsetif,andonlyif:
(i)theentityhasalegallyenforceablerighttoset-offcurrenttaxassetsagainstcurrenttaxliabilities;and
(ii)thedeferredtaxassetsandthedeferredtaxliabilitiesrelatetoincometaxesleviedbythesametaxationauthorityoneitherthesametaxableentity,ordifferenttaxableentitieswhichintendeithertosettlecurrenttaxliabilitiesandassetsonanetbasis,ortorealisetheassetsandsettletheliabilitiessimultaneously,ineachfutureperiodinwhichsignificantamountsofdeferredtaxliabilitiesorassetsareexpectedtobesettledorrecovered.
oOh!mediaGroupLimitedanditswholly-ownedAustraliancontrolledentitieshavedecidedtoimplementthetaxconsolidationlegislationasof1January2003.TheAustralianTaxationOfficehasbeennotifiedofthisdecision.Theentitieshaveenteredintoataxsharingagreement.
Asaconsequence,oOh!mediaGroupLimitedastheheadentityinthe tax consolidated Group and the controlled entities in the tax consolidatedGroupwillcontinuetoaccountfortheirowncurrentanddeferredtaxamounts.Inadditiontoitsowncurrentanddeferredtaxamounts,oOh!mediaGroupLimitedalsorecognisesthecurrenttaxliabilities(orassets)andthedeferredtaxassetsarisingfromunusedtaxlosses and unused tax credits assumed from controlled entities in the tax consolidated Group.
AssetsorliabilitiesarisingundertaxfundingagreementswiththetaxconsolidatedentitiesarerecognisedasamountsreceivablefromorpayabletootherentitiesintheGroup.
(h) Acquisition of assets
Thepurchasemethodofaccountingisusedforallacquisitionsofassetsregardlessofwhetherequityinstrumentsorotherassetsareacquired.Costismeasuredasthefairvalueoftheassetsgivenup,sharesissuedorliabilitiesassumedatthedateofacquisitionplusincidentalcostsdirectlyattributabletotheacquisition.Whereequityinstrumentsareissuedinanacquisition,thevalueoftheinstrumentsistheirmarketpriceasattheacquisitiondate,unlessthenotionalpriceatwhichtheycouldbeplacedinthemarketisabetterindicatoroffairmarketvalue.Transactioncostsarisingontheissueofequityinstrumentsarerecogniseddirectlyinequity.
Wheresettlementofanypartofcashconsiderationisdeferred,theamountspayableinthefuturearediscountedtotheirpresentvalueasatthedateofacquisition.ThediscountrateistheGroup’sincrementalborrowingrate,beingtherateatwhichasimilarborrowingcouldbeobtainedfromanindependentfinancierundercomparabletermsandconditions.
Goodwillisbroughttoaccountonthebasisdescribedinnote1(p).Businesscombinationsareaccountedforonthebasisasdescribedinnote1(z).
i) Impairment of assets
Assetsthathaveanindefiniteusefullifearenotsubjecttoamortisationandaretestedannuallyforimpairment.Assetsthataresubjecttoamortisationarereviewedforimpairmentwhenevereventsorchanges in circumstance indicate that the carrying amount may not berecoverable.Animpairmentlossisrecognisedfortheamountbywhichtheasset’scarryingamountexceedsitsrecoverableamount.Therecoverableamountisthehigherofanasset’sfairvaluelesscoststosell,andvalueinuse.Forthepurposesofassessingimpairment,assetsaregroupedatthelowestlevelsforwhichthereareseparatelyidentifiableandindependentcashflows(cashgeneratingunits).Non-financialassetsotherthangoodwillthatsufferedimpairmentarereviewedforpossiblereversaloftheimpairmentateachreportingdate.Seenote11.
(j) Cash and cash equivalents
Cashandcashequivalentsincludescashonhand,depositsheldatcallwithfinancialinstitutions,bankoverdraftsandotherworkingcapitalfacilities.
(k) Receivables
Alltradedebtorsarerecognisedattheamountsreceivableastheyaredueforsettlementnomorethan90daysfromthedateofrecognition.Collectibilityofdebtorsisreviewedonanongoingbasis.Debtswhichareknowntobeuncollectiblearewrittenoff.
(l) Inventories
Workinprogress
Workinprogressisstatedatthelowerofcostandnet realisablevalue.Costscomprisedirectmaterials,direct labour,directthirdpartycostsandanappropriateproportion ofoverheadsifrelevant.
(m) Financial instruments and other financial assets
(i) Available-for-salefinancialassets
Available-for-salefinancialassetsarereflectedatfairvalue.Unrealisedgainsandlossesarisingfromchangesinfairvaluesaretakendirectlytoequity,unlessthelossesaresignificantorprolonged.
(ii) Otherfinancialassets
Financialassetsatfairvaluethroughprofitorlossaresorecognisedoninitialrecognition.Assetsinthiscategoryareclassifiedascurrentassetsiftheyareeitherheldfortradingorareexpectedtoberealisedwithin12monthsofthebalancesheetdate.
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(n) Property, plant and equipment
Allproperty,plantandequipmentisstatedathistoricalcostlessaccumulateddepreciation.Historicalcostincludesexpenditurethatisdirectlyattributabletotheacquisitionoftheitems.Subsequentcostsareincludedintheasset’scarryingamountorrecognisedasaseparateasset,asappropriate,onlywhenitisprobablethatfutureeconomicbenefitsassociatedwiththeitemwillflowtotheGroupandthecostoftheitemcanbemeasuredreliably.Allotherrepairsandmaintenance are charged to the income statement during the financial period in whichtheyareincurred.
Depreciationiscalculatedonastraightlinebasissoastowriteoffthenetcostofeachitemofplantandequipmentoveritsexpectedusefullifetotheconsolidatedentity.Estimatesofremainingusefullivesaremadeonaregularbasisforallassets,withannualreassessmentsformajoritems.Theexpectedusefullivesareasfollows:
Plantandequipment3-20years
Leaseholdpropertyandimprovementsareamortisedoverthelifeoftheleaseortheexpectedusefullifewhicheveristheshorter.
Theassets’residualvaluesandusefullivesarereviewed,andadjustedifappropriate,ateachbalancesheetdate.Anasset’scarryingamountiswrittendownimmediatelytoitsrecoverableamountiftheasset’scarryingamountisgreaterthanitsestimatedrecoverableamount.
Compensationfromthirdpartiesforitemsofproperty,plantandequipmentthatareimpaired,lostorgivenuparebeincludedinprofitorlosswhenthecompensationbecomesreceivable.
(o) Leases
Adistinctionismadebetweenfinanceleaseswhicheffectivelytransferfromthelessortothelesseesubstantiallyalloftheriskandbenefitincidentaltoownershipofleasednon-currentassetsandoperatingleasesunderwhichthelessoreffectivelyretainssubstantiallyallsuchrisksandbenefits.
Financeleasesarecapitalised.Aleaseassetandliabilityareestablishedatthepresentvalueofminimumleasepayments.Leasepaymentsareallocatedbetweentheprincipalcomponentoftheleaseliabilityandtheinterest expense.
Operatingleasepaymentsarechargedtotheincomestatementsintheperiodinwhichtheyareincurred,asthisrepresentsthepatternofbenefitsderivedfromtheleasedassets.
(p) Intangible assets
(i) Goodwill
Whereanentityoroperationisacquired,theidentifiablenetassetsacquiredaremeasuredatfairvalue.Theexcessofthecostofacquisition,includingthefairvalueofsharesissuedoverthefairvalueoftheidentifiablenetassetsacquired,includinganyliabilityforrestructuringcosts,isbroughttoaccountasgoodwill.Goodwillonacquisitionofbusinesscombinationsisnotamortised.Insteadgoodwillisevaluatedaccordingtonote1(i)‘ImpairmentofAssets’todeterminewhetheritscarryingamountexceedsitsrecoverableamountandhencewhetheranimpairmentlosshasbeenincurredandshouldberecognised.
GoodwillisallocatedtothecashgeneratingunitsoftheGroup.
(ii) Developmentcosts
Developmentcostsrelatingtothedevelopmentoflicencesor contracts are carried at cost less accumulated amortisation. Developmentexpenditureisonlycapitalisedif: - itisprobablethatfutureeconomicbenefitsthatare attributabletotheassetwillflowtotheGroup; - allcostsareseparatelyidentifiable; - theGroupcontrolstheassetandcanrestricttheaccess ofotherstothebenefit;and - theexpenditurearisesfromdevelopmentorthe developmentphaseofaninternalproject.
(iii)Licences,Patents,TrademarksandOther
Alllicences,patentsandtrademarksareassessedashavingeitherafinite or indefinite useful life.
Allitemsthathavebeenclassifiedasbeingindefinitelivedassetswillbeimpairmenttestedannuallyinaccordancewithnote1(i).Allitemsclassifiedasfinitelivedassetsareamortisedovertheusefullifeoftheasset.
RegardlessoftheusefullifeclassificationtheDirectorsassessattheend of each reporting period the classification and rates used to ensure appropriateness.
(q) Trade and other payables
TheseamountsrepresentliabilitiesforgoodsandservicesprovidedtotheGrouppriortotheendofthefinancialperiodandwhichareunpaid.Theamountsareunsecuredandareusuallypaidwithin30daysofrecognition.
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(r) Other financial liabilities and borrowings
Borrowingsareinitiallyrecognisedatfairvalue,netoftransactioncostsincurred.Borrowingsaresubsequentlymeasuredatamortisedcost.BorrowingsareclassifiedascurrentliabilitiesunlesstheGrouphasanunconditionalrighttodefersettlementoftheliabilityforatleast12monthsafterthebalancesheetdate.
(s) Employee entitlements
(i) Wagesandsalariesandannualleave
Liabilitiesforwagesandsalaries,includingnon-monetarybenefitsandannualleaveexpectedtobesettledwithin12monthsofthereportingdatearerecognisedincurrentliabilitiesinrespectofemployees’servicesuptothereportingdateandaremeasuredattheamountsexpectedtobepaidwhentheliabilitiesaresettled.
(ii) Longserviceleave
Theliabilityforlongserviceleaveexpectedtobesettledwithin12monthsofthereportingdateisrecognisedintheprovisionforemployeebenefitsandismeasuredinaccordancewith(i)above.Theliabilityforlongserviceleaveexpectedtobesettledmorethan12monthsfromthereportingdateisrecognisedintheprovisionforemployeebenefitsandmeasuredasthepresentvalueofexpectedfuturepaymentstobemadeinrespectofservicestobeprovidedbyemployeesuptothereportingdate.Incalculatingtheliability,considerationisgiventoexpectedfuturewageandsalarylevels,experienceofemployeedepartures,periodsofserviceandhistoricaldata. Expectedfuturepaymentsarediscountedusinginterestratesonnationalgovernmentguaranteedsecuritieswithtermstomaturitythatmatch,ascloselyaspossible,theestimatedfuturecashoutflows.
(iii)Equitybasedcompensationcosts
TheCompanycurrentlyengagesinthepracticeofallocatingtoitsemployees shares and share options as part of their remuneration packages.EquitybasedcompensationbenefitsareprovidedtoemployeesviatheoOh!mediaGroupLimitedEmployeeShareOptionPlan,assetoutinnote20tothefinancialstatements.
These payments and also payments made to other counterparties inreturnforgoodsandservicesaremeasuredatthemorereadilydeterminablefairvalueofthegoods/servicesorthefairvaluesoftheequityinstrument.
Anexpenseisrecognisedforallsharebasedremunerationdeterminedwithreferencetothefairvalueoftheequityinstrumentsissued.Thefairvalueofequityinstrumentsiscalculatedusingmarketpriceswhereavailable,andwheremarketpricesarenotavailableusingavaluationtechniqueconsistentwiththeBlack-Scholesmethodology,toestimatethepriceofthoseequityinstrumentsinanarm’slengthtransactionbetweenknowledgeable,willingparties.ThefairvaluecalculatedinaccordancewithAASB2ischargedagainstprofitovertherelevantvestingperiods,adjustedtoreflectactualandexpectedlevelsofvesting.This amount is expensed.
Wherethegrantdateandthevestingdatearedifferentthetotalexpenditurecalculatedwillbeallocatedbetweenthetwodatestakingintoaccount the terms and conditions attached to the instruments and the counterpartiesaswellasmanagement’sassumptionsaboutprobabilitiesofpaymentsandcompliancewithandattainmentofthesetouttermsandconditions.
Upontheexerciseofoptions,thebalanceofthesharebasedpaymentsreserverelatingtothoseoptionsistransferredtosharecapital.
(t) Directors’ and key management personnel remuneration
TheCompanyhasincludedintheRemunerationreportoftheannualDirectors’reportinformationabouttheremunerationofDirectorsandkeymanagementpersonnelwhichisrequiredbyAASB124“RelatedPartyDisclosures”inadditiontomeetingtherequirementssetoutinclause4oftheRegulations.
AASB124defines“keymanagementpersonnel”asthosepersonshavingauthorityandresponsibilityforplanning,directingandcontrollingtheactivitiesoftheentity,directlyorindirectly,includinganyDirector(whetherexecutiveorotherwise)ofthatentity.
TheDirectorsconsiderthatthekeymanagementpersonnel oftheCompanyandoftheGrouparethesamepeopleasdefinedbys300AofTheCorporationsAct2001asDirectorsandexecutives.
(u) Borrowing costs
Borrowingcostsarerecognisedasexpensesintheperiodinwhichtheyareincurred.Borrowingcostsinclude: – interestonbankoverdrafts; – amortisationofancillarycostsincurredwiththearrangementof
borrowings;and– financeleasecharges.
(v) Earnings per share
Basicearningspershare
Basicearningspershareisdeterminedbydividingtheoperatingprofitafterincometaxbytheweightedaveragenumberofordinarysharesoutstanding during the financial period.
Dilutedearningspershare
Dilutedearningspershareadjuststhefiguresusedinthedeterminationofbasicearningspersharebytakingintoaccountanyreductioninearningspersharethatwouldarisefromtheexerciseofoptionsoutstanding during the financial period.
(w) Share issue costs
Shareissuecostsarechargeddirectlyagainstsharecapital.
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(x) Rounding of accounts
TheCompanyisofakindreferredtoinClassOrder98/0100,issuedbytheAustralianSecuritiesandInvestmentsCommission,relatingtothe‘roundingoff’ofaccountsinthefinancialreport.AmountsinthefinancialreporthavebeenroundedoffinaccordancewiththatClassOrdertothenearestthousanddollars,orincertaincases,thenearestdollar.
(y) Critical accounting estimates and assumptions
Estimatesandjudgementsarecontinuallyevaluatedandarebasedonhistoricalexperienceandotherfactors,includingexpectationsoffutureeventsthatarebelievedtobereasonableunderthecircumstances.
TheGroupmakesestimatesandassumptionsconcerningthefuture.Theresultingaccountingestimateswill,bydefinition,seldomequaltherelatedactualresults.Theestimatesandassumptionsthathaveasignificantriskofcausingamaterialadjustmenttothecarryingamountofassetsandliabilitieswithinthenextfinancialyeararesetoutbelow:
(i)Incometaxes
TheGroupissubjecttoincometaxes.Significantjudgementisrequiredindeterminingthecarryingamountofcurrentanddeferredtaxassetsandliabilities.TheGrouprecognisescurrentanddeferredtaxassetsandliabilitiesbasedonestimatesandpredictionsoffutureevents,includingprofitbudgets,forecastsandthelikelihoodofanyadversechangesinincometaxlegislation.TherecoupmentoftaxlossesissubjecttotheGroupsatisfyinglegislativerequirementsparticularlythecontinuityofownershiptestandthesamebusinesstestandcomplyingwiththeinterpretationofthosetestsbytheAustralianTaxationOfficeviaitsrelevanttaxationrulings.Wherethese estimates and predictions differ from the final outcomes of theseevents,suchdifferenceswillimpactthecurrentanddeferredtaxassetsandliabilitiesandincometaxexpenseintheperiodsinwhichthefinaloutcomesoftheseeventsoccur.Detailsofthenatureandcarryingamountofcurrentanddeferredtaxassetsandliabilitiesaresetoutinnote5,13and19.
(ii)Impairmentofassets Note1(i)setsouttheGroup’saccountingpolicyregardingtesting certainassetsforimpairment.Thecalculationoftherecoverable amountoftheseassetsrequirestheuseofassumptionsincluding: theprobabilityoflease/licencerenewal,thecontinuityofexpected earning capacity of the assets and the discount rates applied to cash flowprojections.Theseassumptionsarereviewedforeach impairment test carried out and any changes in the assumptions mightchangetherecoverableamountscalculatedfortheseassets.
33
(z) Business combinations
Acquisitionsofcontrolledentitiesandbusinessesareaccountedforusingthepurchasemethod.Thecostofthebusinesscombinationismeasuredastheaggregateofthefairvalues(atthedateofexchange)ofassetsgiven,liabilitiesincurredorassumed,andequityinstrumentsissuedbytheGroupinexchangeforcontroloftheacquiree.Theacquiree’sidentifiableassets,liabilitiesandcontingentliabilitiesthatmeettheconditionsforrecognitionunderAASB3‘BusinessCombinations’arerecognisedattheirfairvaluesattheacquisitiondate,exceptfornon-currentassets(ordisposalgroups)thatareclassifiedasheldforsaleinaccordancewithAASB5‘Non-currentAssetsHeldforSaleandDiscontinuedOperations’,whicharerecognisedandmeasuredatfairvaluelesscoststosell.
Goodwillarisingonacquisitionisrecognisedasanassetandinitiallymeasuredatcost,beingtheexcessofthecostofthebusinesscombinationovertheGroup’sinterestinthenetfairvalueoftheidentifiableassets,liabilitiesandcontingentliabilitiesrecognised.If,afterreassessment,theGroup’sinterestinthenetfairvalueoftheacquiree’sidentifiableassets,liabilitiesandcontingentliabilitiesexceedsthecostofthebusinesscombination,theexcessisrecognisedimmediatelyinstatementofcomprehensiveincomeasincome.
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2. Segment information
a) Reportable segments
Identification of reportable segments
TheGrouphasidentifieditsoperatingsegmentsinaccordancewithitsaccountingpolicy.
Theoperatingsegmentsareidentifiedbymanagementbasedonthemannerinwhichtheproductissold,andthenatureoftheservicesprovidedandthe
locationofthemarketinwhichtheyareprovided.DiscretefinancialinformationabouteachoftheseoperatingbusinessesisreportedtotheChiefExecutive
Officer.
Managementhasidentifiedtwooperatingsegments,thatofout-of-homemediaandexperientialmarketing.Theseoperatingsegmentshavebeen
aggregatedintoasinglereportablesegmentinaccordancewiththeGroup’saccountingpolicy.
TheGroupisorganisedinonesinglereportablesegment,thatofout-of-homemedia.
TheconsolidatedentityoperatedonlyinAustraliain2009and2010.
b) Major customers
TheGroup’scustomersareprimarilymediabuyingandplanningagencies.Nooneagencyconstitutesmorethan10%oftheGroup’srevenuefromcontinuing
operations.
34
Consolidated
2010$’000
2009$’000
Revenue from continuing operations
Sales revenue
Saleofmediaproductionandservices 109,700 86,040
Other income
Interest income 30 8
Total revenue and other income 109,730 86,048
3. Revenue and other income
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4. Items included in profit before income tax
Consolidated
2010$’000
2009$’000
Profit before income tax includes the following specific expenses:
Depreciationofplantandequipment 3,715 3,331
Amortisationofintangibleassets 591 448
Lossondisposalofnon-currentassets - 898
Directors’andemployees’superannuationcontributions 925 778
Rentalexpenserelatingtooperatingleases:
Minimumleasepayments 749 717
Borrowingcosts:
Interestonbankfacilitiesdrawn 2,983 3,278
PresentvalueadjustmentsandpaymentsinrelationtothedeferredconsiderationontheacquisitionofSports&OutdoorMediaPtyLimited 2,676 1,391
5,659 4,669
Sharebasedpaymentsexpense-shares - 41
Sharebasedpaymentsexpense-options 422 -
422 41
5. Income tax
( ) Income tax (expense)
Currenttax(charge) (3,874) (2,296)
Deferredtax(charge)/credit (744) 602
Overprovisioninpriorperiods 464 100
Net income tax (expense) (4,154) (1,594)
Income tax (expense) is attributable to:
(Profit)fromcontinuingoperations (4,154) (1,594)
Deferredincometax(charge)/creditincludedinincometax(expense)comprises:
Increase in deferred tax assets 151 363
(Increase)/decreaseindeferredtaxliabilities (895) 239
(744) 602
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(b) Reconciliation of income tax attributable to the financial year to the prima facie income tax (expense) due on the operating profit
Consolidated
2010$’000
2009$’000
Profitfromcontinuingoperationsbeforeincometax 11,182 6,485
Incometax(expense)calculatedat30%(2009:30%) (3,355) (1,946)
Tax effect of differences:
Non-deductibleexpenses (228) (80)
Capitalraisingcosts 73 48
Investmentallowances - 233
Overprovisioninpriorperiods 464 100
Temporarydifferencesbroughttoaccountduetochangesintaxlegislation (422) -
Temporarydifferencespreviouslynotbroughttoaccount (720) -
Other 34 51
Incometax(expense) (4,154) (1,594)
oOh!mediaGroupLimitedanditswholly-ownedAustraliancontrolledentitieshaveimplementedthetaxconsolidationlegislationasof1January2003.TheAustralianTaxationOfficehasbeennotifiedofthisdecision.Theentitieshaveenteredintoataxsharingagreement.
Asaconsequence,oOh!mediaGroupLimitedastheheadentityinthetaxconsolidatedGroupandthecontrolledentitiesinthetaxconsolidatedGroupwillcontinuetoaccountfortheirowncurrentanddeferredtaxamounts.Inadditiontoitsowncurrentanddeferredtaxamounts,oOh!mediaGroupLimitedalsorecognisesthecurrenttaxliabilities(orassets)andthedeferredtaxassetsarisingfromunusedtaxlossesandunusedtaxcreditsassumedfromcontrolledentities in the tax consolidated Group.
Assetsorliabilitiesarisingundertaxsharingagreementswiththetaxconsolidatedentitiesarerecognisedasamountsreceivablefromorpayabletootherentities in the Group.
ThetaxconsolidatedGrouphasfrankingcreditsavailableforsubsequentreportingperiods,adjustedforfrankingcreditsthatwillarisefromthepaymentoftheamountoftheprovisionforincometaxat31December2010,of$4,911,157(2009:$1,764,723).
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6. Auditor’s remuneration
Consolidated
2010$
2009$
RemunerationoftheauditoroftheCompanyfor:
Auditorreviewoffinancialreports
Currentyear-PKF 200,000 150,000
Prioryear-PKF 34,242 21,500
234,242 171,500
Otherservices - 4,500
Otherassuranceservices 20,790 2,100
255,032 178,100
7. Current assets - Cash and cash equivalents$’000 $’000
Cashatbankandinhand 6,525 307
Reconciliation of cash
Cashattheendofthefinancialyearisreconciledtotherelateditemsinthebalancesheetsasfollows:
Balancesasabove 6,525 307
Bankfacilitiesdrawn(seenote15) (151) (5,306)
6,374 (4,999)
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8. Current assets - Trade and other receivablesConsolidated
2010$’000
2009$’000
Tradereceivables 22,344 18,895
Provisionforbadanddoubtfuldebts (949) (577)
Nettradereceivables 21,395 18,318
Otherdebtors 1,076 760
Prepayments 1,478 638
23,949 19,716
Trade receivables ageing
Theageingoftradereceivablesat31Decemberissetoutbelow:
Consolidated Consolidated
2010 2010 2009 2009
Gross$’000
Provision$’000
Gross$’000
Provision$’000
Notpastdue 20,321 - 17,559 (285)
Pastdue0-30days 933 - 883 (169)
Pastdue31-60days 203 (73) 259 (45)
Pastdue61-90days 30 (19) 165 (49)
Pastdue90days+ 857 (857) 29 (29)
22,344 (949) 18,895 (577)
38
Movement in provisions for bad and doubtful debts
Consolidated
2010$’000
2009$’000
Carryingvalueat1January 577 39
Additionalprovisionsmadeduringtheyear 405 640
Amountsusedduringtheyear (33) (102)
Carryingvalueat31December 949 577
Allcreditrisksassociatedwithtradereceivableshavebeenprovidedforinthebalancesheet.Provisionsforbadanddoubtfuldebtsaremadeonthefollowing
bases:
- Individualongoingassessmentsofeachinvoiceandcustomeraccount,basedonknowledgeofthecustomerandtheircredithistory;and
- Astatisticalmethodtodeterminethelevelofprovision,basedonpastlevelsofbaddebtswrittenoff.
Detailsofthecompany’screditrisksandriskmanagementpoliciesaresetoutinnote21.
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9. Current assets - InventoriesConsolidated
2010$’000
2009$’000
Workinprogressatcost 92 39
10. Non-current assets - Property, plant and equipment
Leaseholdimprovementsatcost 1,563 1,325
Less:accumulateddepreciation (930) (706)
633 619
Plantandequipmentatcost 21,899 18,510
Less:accumulateddepreciation (8,251) (5,966)
13,648 12,544
Leasedplantandequipmentatcost 9,724 9,350
Less:accumulatedamortisation (4,217) (3,070)
5,507 6,280
Totalcarryingvalueat31December 19,788 19,443
Plantandequipmentincludesadditionsintheyearofassetsunderconstruction,atcost 1,100 529
Assetsunderconstructionhavenotbeendepreciatedduringtheyear.
39
Movements in carrying amounts
2010
Leaseholdimprovements
$’000
Plant andequipment
$’000
Leased plant& equipment
$’000Total
$’000
Consolidated
Carryingvalueat1January2010 619 12,544 6,280 19,443
Additions 238 3,495 374 4,107
Disposals - (47) - (47)
Depreciationandamortisationexpense (224) (2,344) (1,147) (3,715)
Carryingvalueat31December2010 633 13,648 5,507 19,788
2009
Consolidated
Carryingvalueat1January2009 843 12,082 7,096 20,021
Additions - 2,497 256 2,753
Depreciationandamortisationexpense (224) (2,035) (1,072) (3,331)
Carryingvalueat31December2009 619 12,544 6,280 19,443
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11. Non-current assets - Intangible assets
Consolidated
2010$’000
2009$’000
Goodwillatdeemedcost 10,838 10,838
Licenceswithdefiniteusefullives,atcost 6,013 5,840
Licenceswithindefiniteusefullives,atcost 83,391 82,114
Less:accumulatedamortisation (1,350) (925)
Less:impairmentloss (451) (451)
87,603 86,578
Computersoftwareatcost 1,043 842
Less:accumulatedamortisation (468) (405)
575 437
Totalcarryingvalueat31December 99,016 97,853
Licencesincludethoseinadevelopmentstage,atcost 588 592
Licencesindevelopmenthavenotbeenamortisedduringtheyear.
Movements in carrying amounts
2010Goodwill
$’000Licences
$’000
ComputerSoftware
$’000Total
$’000
Consolidated
Carryingvalueat1January2010 10,838 86,578 437 97,853
Additions - 1,450 201 1,651
Amortisationexpense - (425) (63) (488)
Carryingvalueat31December2010 10,838 87,603 575 99,016
Movements in carrying amounts
2009Goodwill
$’000Licences
$’000
ComputerSoftware
$’000Total
$’000
Consolidated
Carryingvalueat1January2009 11,002 87,221 440 98,663
Additions - 520 53 573
Disposals (164) (771) - (935)
Amortisationexpense - (392) (56) (448)
Carryingvalueat31December2009 10,838 86,578 437 97,853
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Intangibleassetsotherthangoodwillhavedefiniteorindefinitelives.Intangibleassetshavingindefiniteusefullivescompriseoutdoormediaassetleases,licencesandcontracts.Managementhaveassessedtheusefullivesoftheseleases,licencesandcontractsandhavedeterminedthattheusefullivesareindefinite.Thefactorsthathaveplayedasignificant role in these determinations include:
-Theusefullivesoftheleases,licencesandcontractsarenotdefinite;-Theleases,licencesandcontractsmayberenewedatlittleornocost;-Theleases,licencesandcontractsmayhavebeenrenewedinthepast;-Thepresence(orlackthereof )ofanycompellingchallengetothe lease,licenceandcontractrenewals;-Theintentiontorenewtheleases,licencesandcontractsandthe Group’sabilitytodoso;and-Theprobabilityoftheleases,licencesandcontractscontributingtotheGroup’snetcashinflowsindefinitely.
Impairment tests for cash generating units containing goodwill and intangible assets with indefinite useful lives(i)Cashgeneratingunits(CGUs)
CGUsfallintooneofthefollowingcategories,whicharebaseduponthedegreetowhichthecashflowsfromagroupofassetsareindependentfrom other assets or groups of assets:-groupsofoutdoormediaassetleases,licencesandcontracts,totheextentthattheyarethesmallestidentifiablegroupofoutdoormediaassetsthatgeneratethosecashflows;and
-businesses,totheextentthattheyarethesmallestidentifiablegroupofoutdoormediaassetsthatgeneratethosecashflows.ThiswouldgenerallyhappeninthecaseofabusinesscombinationthatisrunindependentlyfromtherestoftheGroup’soperationsandcashflowscannotbeallocatedtoindividualoutdoormediaassetsorgroupofassets.Inassessingtheindependenceofthecashflowsfromassets,managementconsidersinparticularhowrevenueisgeneratedandrecorded,andhowmanagementmakescommercialdecisionsbaseduponthecashflowsandresults of the impairment tests conducted.
CGUSforimpairmenttestinghavebeenidentifiedas
•mediaassetpropertyleasesandcontracts;
•retailmediaassetlicensesandcontracts;and
•theSportsandOutdoorMediaPtyLtdbusiness.
GoodwillacquiredthroughbusinesscombinationsandintangiblelicenceshavebeenallocatedtotheseCGUs.
(ii)CarryingamountofgoodwillandintangibleassetswithindefiniteusefullivesallocatedtoeachCGU
ThecarryingamountsofgoodwillandintangibleassetswithindefiniteusefullivesallocatedtoeachoftheCGUsaresetoutbelow.
Consolidated 2010
Property leases$’000
Retail media asset licences
$’000
Sports and Outdoor Media
Pty Ltd$’000
Total$’000
Carrying amount of goodwill 8,387 2,451 - 10,838
Carrying amount of leases, licences and contracts with indefinite lives 17,075 24,845 41,471 83,391
Consolidated 2009
Propertyleases$’000
Retailmediaasset licences
$’000
SportsandOutdoorMedia
PtyLtd$’000
Total$’000
Carryingamountofgoodwill 8,387 2,451 - 10,838
Carryingamountofleases,licencesandcontractswithindefinitelives 15,561 25,082 41,471 82,114
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(iii)RecoverableamountofCGUs
TherecoverableamountofaCGUisdeterminedbasedonvalue-in-usecalculations.Thesecalculationsuse1to5yearcashflowprojectionsbasedonfinancialbudgetspreparedandapprovedbymanagement.Cashflowsbeyondthefinancialbudgetsareextrapolatedusingestimatedgrowthrates,assetoutbelow.
(iv)KeyassumptionsusedinvalueinusecalculationsfortheCGUsforgoodwillandintangibleassetswithindefiniteusefullives
Thecalculationforvalueinuseforoutdoormediaassetbusinessesandlicencesandcontractsincludesthefollowingassumptions:
Discount ratesThepre-taxdiscountratesappliedtocashflowprojectionsistherangefrom16.2%p.a.to20.7%p.a.(2009:16.0%p.a.to21.2%p.a.).Thesediscountratesareconsistentwithpastexperienceandexternalsourcesof information.
Expected licence/contract tenureThisistheexpectedtimethateachCGUisexpectedtodelivereconomicbenefittotheentityandisintherangefrom10to60years,whichisnotmateriallydifferentfromusingaterminalvalueinthevalueinusecalculations.TherangeusedfortheSportsandOutdoorMediaPtyLtdbusinessis60years.
ContributionContributionistheeconomicbenefitexpectedtoflowtotheentityfromeachCGU.
Growth rateGrowthrateistheannualpecentageincrementincontribution.Managementdeterminesthiswithregardtoexpectedinflation,industryanddemandgrowthratesovertheexpectedlicence/contracttenuresofeachcashgeneratingunit.ThecontributiongrowthratesappliedtoallCGUsareintherangefrom0.0%p.a.to3.0%p.a.ThegrowthrateusedfortheSportsandOutdoorMediaPtyLtdbusinessis3.0%p.a.
(v)SensitivitytochangesinassumptionsManagementbelievethatanypossiblechangesinanyoftheabovekeyassumptionswouldnotcausethecarryingvalueofeachcashgeneratingunittoexceedmateriallyitsfairvalue.
12. Non-current assets - other financial assetsConsolidated
2010$’000
2009$’000
Available-for-sale financial assets
Unlistedequitysecuritiesatfairvalue 413 516
Total carrying value of other financial assets 413 516
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13. Deferred tax assets
Consolidated
2010$’000
2009$’000
The balance comprises temporary differences attributable to:
Amounts recognised in statement of comprehensive income
Employeebenefits 362 284
Provisionsfordoubtfuldebts 272 173
Legalcostsofacapitalnature 150 201
Accruals&sundryitems 107 69
Totalamountsrecognisedinstatementofcomprehensiveincome 891 727
Amounts recognised directly in equity
Capitalraisingexpenses 141 43
Set-offofdeferredtaxliabilitiespursuanttoset-offprovisions(seenote19) (1,032) (770)
Netdeferredtaxassets - -
Movements
At1January - -
Creditedtothestatementofcomprehensiveincome 151 363
Credited/(debited)toequity 100 (46)
Set-offofdeferredtaxliabilitiespursuanttoset-offprovisions(seenote19) (251) (317)
At31December - -
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14. Current liabilities - Trade and other payables
Consolidated
2010$’000
2009$’000
Tradepayables 4,095 2,708
Otherpayables 11,223 8,509
15,318 11,217
Tradepayablesareunsecuredandnoninterest-bearing.
15. Current liabilities - Borrowings
Bankfacilitiesdrawn 151 5,306
Leaseliabilities(seenote25) 1,861 1,943
Commercialbillline 2,800 2,800
4,812 10,049
Unrestrictedaccesswasavailableat31Decembertothefollowinglinesofcredit:
Workingcapitalfacility/bankoverdraft 15,000 15,000
Commercialbillline 22,450 25,250
Equipmentfinancerevolvingfacility 6,000 6,000
Total facilities 43,450 46,250
Usedat31December:
Workingcapitalfacility 151 5,306
Commercialbillline 22,450 25,250
Equipmentfinancerevolvingfacility 3,526 5,138
26,127 35,694
Theworkingcapitalandthecommercialbillfacilitiesmaybedrawnatanytimeandarereviewedannuallybythebank.TheyaresecuredbyafixedandfloatingchargeoveralltheassetsoftheGroup.Therearenomaterialtermsorconditionsrelatingtotheassetspledgedascollateral. DetailsoftheGroup’sinterestrateexposurearesetoutinnote21.
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Notes to the Financial Statements31December2010
Consolidated
2010$’000
2009$’000
Employeeentitlements(seenote26) 452 371
Movements in provisions
Carryingvalueat1January 371 307
Additionalprovisionrecognised 564 353
Unusedamountsreversedduringtheyear (40) (14)
Amountsusedduringtheyearinrespectofemployeeentitlementspaid (443) (275)
Carryingvalueat31December 452 371
17. Non-current liabilities - Borrowings
Leaseliabilities(seenote25) 1,665 3,195
Commercialbillline(seenote15) 19,650 22,450
Less:Costsoffacilities (68) (129)
21,247 25,516
16. Current liabilities - Provisions
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Notes to the Financial Statements31December2010
18. Non-current liabilities - ProvisionsConsolidated
2010$’000
2009$’000
Employeeentitlements(seenote26) 755 575
Movements in provisions
Carryingvalueat1January 575 568
Additionalprovisionrecognised 232 16
Unusedamountsreversedduringtheyear (5) (1)
Amountsusedduringtheyearinrespectofemployeeentitlementspaid (47) (8)
Carryingvalueat31December 755 575
19. Non-current liabilities - Deferred tax liabilities
The balance comprises temporary differences attributable to:
Amounts recognised in statement of comprehensive income
Intangibleassets 1,179 874
Financeleasedassets 594 342
DeferredconsiderationonacquisitionofSports&OutdoorMediaPtyLtd 352 -
Set-offofdeferredtaxassetspursuanttoset-offprovisions(seenote13) (1,032) (770)
Netdeferredtaxliabilities 1,093 446
Movements
At1January 446 1,002
Charged/(credited)tothestatementofcomprehensiveincome 898 (239)
Set-offofdeferredtaxassetspursuanttoset-offprovisions(seenote13) (251) (317)
At31December 1,093 446
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Notes to the Financial Statements31December2010
(b) Movements in ordinary share capital and options over ordinary shares
*875,195and1,624,805shareswereissuedtoMrBrendonCookon21May2006and3July2006fornoconsideration.Thesharesweresubjecttoescrowfora
periodof3yearsfromthedateofissue,andweresubjecttoforfeitureifMrCook’semploymentwiththeCompanywasterminatedforanycauseorMrCook
resignedasanemployeeatanytimewithin3yearsofthedateofissueoftheshares.
InaccordancewithAASB2ShareBasedPayments,thevalueoftheshareswasexpensedoverthevestingperiod.Thesharebasedpaymentexpense
recognisedfor2010was$nil(2009:$40,954).ThefairvalueofMrBrendonCook’sshareswascalculatedusingmarketpricesatthetimeofissue.
(c) Ordinary sharesVoting rightsEveryholderofsharespresentinpersonorbyproxy,attorneyorrepresentativeatameetingofshareholdershasonevoteonavotetakenbyashowofhands,and,onapolleveryholderofshareswhoispresentinpersonorbyproxy,attorneyorrepresentativehasonevoteforeveryfullypaidshareheldbyhimorher,andaproportionatevoteforeverypartlypaidshare,registeredinsuchshareholder’snameontheparententity’sshareregister.
ApollmaybedemandedbytheChairpersonofthemeeting,byany5shareholderspresentinpersonorbyproxy,attorneyorrepresentative,orbyanyoneormoreshareholderswhoaretogetherentitledtonotlessthan5%ofthetotalvotingrightsof,orpaidupvalueof,thesharesofallthoseshareholdershavingtherighttovoteatthatmeeting.
20. Contributed equity(a) Issued and paid up capital
Consolidated and parent entity
2010 2009 2010$’000
2009$’000
Ordinarysharesissuedandfullypaid 438,120,012 370,977,155 79,547 66,996
Optionsoutstandingat31December 23,000,000 -
No.ofsecurities
Date Details Number of Shares $’000 Number of Options $’000
1 January 2009 370,977,155 67,001 22,005,000 1,226
31May2009 OptionsLapsed - - (2,005,000) (141)
30June2009 Optionslapsed - - (20,000,000) (1,085)
30June2009 Sharebasedpaymentsexpense - 41* - -
31December2009 Deferredtaxdebitrecogniseddirectlyinequity - (46) - -
31 December 2009 370,977,155 66,996 - -
31March2010 SharesissuedinconsiderationfortheacquisitionofSportsandOutdoorMediaPtyLtd 10,000,000 1,046 - -
18June2010 Optionsissued - - 13,500,000 322
21June2010 Optionsissued - - 9,500,000 100
6December2010 Sharesissued 57,142,857 11,405 - -
31December2010 Deferredtaxcreditrecogniseddirectlyinequity - 100 - -
31 December 2010 438,120,012 79,547 23,000,000 422
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Notes to the Financial Statements31December2010
Dividends rightsDividendsarepayableoutoftheparententity’sprofitsandaredeclaredordeterminedtobepayablebytheDirectors.Dividendsdeclaredwillbepayableonthe shares at a fixed amount per share.
Transfer of SharesAshareholdermaytransfersharesbyamarkettransferinaccordancewithanycomputerisedorelectronicsystemestablishedorrecognisedbytheASXortheCorporationsAct2001forthepurposeoffacilitatingtransfersinsharesorbyaninstrumentinwritinginaformapprovedbytheASXorinanyotherusualformorinanyformapprovedbytheDirectors.TheDirectorsmayrefusetoregisteranytransferofshares,otherthanaProperSCHTransfer,wherepermittedbytheListingRulesoftheASX.TheparententitymustnotrefuseorfailtoregisterorgiveeffecttoordelayorinanywayinterferewithaProperSCHTransferofSharesorothersecurities.
Liquidation RightsTheparententityhasonlyoneclassofsharesonissue,whichallrankequallyintheeventofliquidation.Oncealltheliabilitiesoftheparententityaresatisfied,aliquidatormay,withtheauthorityofaspecialresolutionofshareholders,divideamongtheshareholdersatthetimethewholeoranypartoftheremainingassetsoftheparententity.Theliquidatormaywiththesanctionofaspecialresolutionoftheparententityvestthewholeoranypartoftheassetsintrustforthebenefitofshareholdersastheliquidatorthinksfit,butnoshareholdercanbecompelledtoacceptanysharesorothersecuritiesinrespectofwhichthereisanyliability.
(d) OptionsAnEmployeeShareOptionPlan(‘ESOP’)isoperatedbytheCompanytoallowselectedpermanentemployeesandDirectorstoparticipateinthegrowthoftheCompanythroughtheissueofoptionsoverordinarysharesintheCompany.EligibilityforparticipationisatthediscretionoftheBoard.
Theoptionsaregrantedfornoconsiderationandcarrynodividendorvotingrights.Theoptionsaregenerallyexercisablewithinfiveyearsfromthedateofgrantattheexerciseprice,subjecttothesatisfactionofperformancehurdles.Theoptionsexpirefiveyearsfromthedateofgrant.Eachoptionissuedisconvertibleintooneordinaryshare.TheexercisepriceoftheoptionsistheweightedaveragemarketpriceoftheCompany’ssharessoldontheASXduringtheweekimmediatelypriortoandincludingthegrantdate.Theexercisepriceispayableatthetimeofexerciseoftheoptions.Theoptionsmustnotbetransferred,encumberedorotherwisedisposedofwithoutthepriorconsentoftheBoard.
OptionsnormallylapseiftheoptionholderceasestobeanemployeeoftheCompanyoranyofitssubsidiariesandinthecaseofaDirector,ceasestoholdoffice,otherwisethanbydeath,permanentincapacity,redundancy,retirementorterminationbyconvenience.Intheseevents,optionsnormallyvestnothedate of cessation.
48
Grant dateVesting
dateExpiry
dateExercise
Price
Fair value of each
option at grant date
Outstandingat
1 January2010
Issued during
the year
Lapsedduring
the year
Exercisedduring the
year
Outstandingat
31 December 2010
21May2010 21May2010 20May2015 $0.12 $0.069 - 3,000,000 - - 3,000,000
21May2010 21May2012 20May2015 $0.12 $0.067 - 6,750,000 - - 6,750,000
21May2010 21May2013 20May2015 $0.12 $0.058 - 6,700,000 - - 6,700,000
21May2010 21May2014 20May2015 $0.12 $0.050 - 6,550,000 - - 6,550,000
- 23,000,000 - - 23,000,000
Weighted average exercise price - $0.12 - - $0.12
Nooptionswereexercisedduringtheyear.
Weighted average remaining contractual life (years) 4.4
(e) Options issued under the Employee Share Option Plan (“ESOP”)
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Theassessedfairvalueatgrantdateofoptions,calculatedinaccordancewithAASB2ShareBasedPayments,grantedtoDirectorsandkeymanagement
personnelisallocatedequallyovertheperiodfromgrantdatetovestingdate,andtheamountsaredisclosedintheremunerationtables.Fairvaluesare
determinedusingaBlack-Scholesoptionpricingmodelthattakesintoaccounttheexerciseprice,thetermandexpectedlifeoftheoption,thevestingand
performancecriteria,theimpactofdilution,thesharepriceatgrantdateandexpectedpricevolatilityoftheunderlyingshare,theexpecteddividendyield
andtherisk-freeinterestrateforthetermoftheoption.
Inputsintothemodelusedaresetoutbelow:
Dividendyield:0%
Expectedvolatility:60%
Risk-freeinterestrate:5.60%
Expectedlifeofoptions:2.8to5years
Theseinputsarereviewedandupdatedforeachandeverygrantofoptions.
49
21. Financial instruments and financial risk management
(a) Risks arising from financial instruments
TheGroupconductstransactionsinthefollowingfinancialinstruments:
- Cashandcashequivalents;
- Receivables;
- Deposits;
- Payables;and
- Borrowings,includingbankbillsandbankloans,andconvertiblenotes.
TheGroupisexposedtofinancialrisksasaresultofthesetransactions.Thesecanbeclassifiedintocreditrisk,liquidityriskandmarketrisk(inrespectof
interestraterisk,foreigncurrencyriskandotherpricerisks).
TheGrouphasinplaceariskmanagementframeworkthatmitigatestheserisks,withthepurposeofmitigatingoverallrisktofinancialperformance.Financial
riskmanagementpoliciesareapprovedbytheAuditCommittee.TheGroupdoesnotconductderivativetransactionsnortradespeculativelyinfinancial
instruments,derivativeorotherwise.Interestratesarefixedoncertainbankloans,asapprovedbytheboardofDirectorsonacasebycasebasis.
TheGroupmanagesitsrisksinconsiderationofbothitsfinancialresultsanditsunderlyingfinancialposition.
Financial Risk Factors and mitigation
ThefinancialrisksassociatedwiththeGroup’stransactionsandtheGroup’srelatedriskmanagementpolicies,aresetoutbelow.
Market Risks
(i) Interest Rate Risk
Interestrateriskistheriskthatthefairvalueofafinancialinstrumentoritscashflowswillvary,duetochangesininterestrates.
Interestbearingfinancialassetscomprisecashatbankandinhand.Surpluscashatbankisusedtoreduceworkingcapitalfacilities,thereforethereisminimal
interestrateriskonfinancialassets.
FinancialliabilitiesrelatetodebtandborrowingsfromtheGroup’sprimarybanker,WestpacBankingCorporation.
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Notes to the Financial Statements31December2010
Cashflowinterestrateriskarisesmainlyfromborrowingsthatattractvariableinterestrates.Workingcapitalfacilitiesattractavariableinterestrate.TheGroup
managestheinterestrateexposureonthisfacilityinaccordancewithtargetedratiosoffixedinterestdebttovariableinterestratedebt.Thesetargetsare
continuallyreviewed.
Otherfinancialliabilitiescomprisecommercialbilllinesandequipmentfinancefacilities,whichhavefixedinterestrates.Thedeferredconsiderationforthe
acquisitionofSportsandOutdoorMediaPtyLtdhasassociatedfixedborrowingcosts.
TheGroupdoesnothedgeinterestrateriskorusederivativestomanageitsinterestraterisk.AllinterestratesapplicableareAustralianinterestrates.
Detailsofeachclassofassetandliabilityandrespectiveinterestrateexposuresaresetoutbelowandinnote15.
Allotherassetsandliabilitiesarenon-interestbearing.
50
ThetablesbelowanalysetheGroup’sfinancialliabilitiesincludinginteresttomaturityintorelevantmaturitygroupingsbasedontheremainingperiod
atthereportingdatetothecontractualmaturitydate.Theamountsdisclosedinthetablesarethecontractualundiscountedcashflows.
Consolidated
2010
1 yearor less$’000
Over 1 to2 years
$’000
Over 2 to3 years
$’000
Over 3 to 4 years
$’000
Over 4 to5 years
$’000Total
$’000
Financial Assets
Variable interest rates
Cashassets 5,625 - - - - 5,625
5,625 - - - - 5,625
Financial Liabilities
Variable interest rates
Workingcapitalfacility 151 - - - - 151
Commercialbilllines 3,262 4,892 - - - 8,154
Fixed interest rates
Commercialbilllines 1,482 16,112 - - - 17,594
Financeleaseliabilities(seenote25) 2,076 1,237 368 110 58 3,849
6,971 22,241 368 110 58 29,748
DeferredconsiderationfortheacquisitionofSportsandOutdoorMediaPtyLtd 18,630 - - - - 18,630F
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Notes to the Financial Statements31December2010
51
Consolidated
2009
1 yearor less$’000
Over 1 to2 years
$’000
Over 2 to3 years
$’000
Over 3 to 4 years
$’000
Over 4 to5 years
$’000Total
$’000
Financial Assets
Variable interest rates
Cashassets 307 - - - - 307
307 - - - - 307
Financial Liabilities
Variable interest rates
Workingcapitalfacility 5,306 - - - - 5,306
Commercialbilllines 3,168 3,295 4,856 - - 11,319
Fixed interest rates
Commercialbilllines 1,482 1,482 16,112 - - 19,076
Financeleaseliabilities(seenote25) 2,300 2,019 1,166 271 18 5,774
12,256 6,796 22,134 271 18 41,475
DeferredconsiderationfortheacquisitionofSportsandOutdoorMediaPtyLtd 6,575 19,790 435 - - 26,800
Sensitivity Analysis
Thetablebelowsetsouttheeffectonprofitaftertaxandequityifinterestrateshadbeenhigherorlowerduringtheyearbyanamountof100basis
points(or1%p.a.).Thisamounthasbeenusedasitrepresentsfour25basispointrises,whichisreasonablypossibleinthecurrenteconomicenvironment,
andconfirmedbymarketexpectationsthatinterestratesinAustraliaarelikelytoincreaseinthecomingyear.
Ifinterestrateswerehigherby1%p.a.,profitandequitywillbedecreaseddueto:
- increasedinterestexpenseonvariablerateborrowings;and
- increasedinterestexpenseonfixedinterestborrowingstakenoutintheyear,duetoincreasesintheprevailinginterestrateatthetimetheborrowings
weretakenout.
Thesetwofactorsarepartiallyoffsetbyanincreaseininterestincomefromcashbalances.
Acorrespondingdecreasewouldoccurininterestexpense(andthusanincreaseinprofitandequity)ifinterestrateswerelowerby1%p.a.
Consolidated
Net Profit Equity
2010$’000
2009$’000
2010$’000
2009$’000
Ifinterestrateswerehigherby1%p.a.withallothervariablesheldconstant-increase/(decrease) (49) (109) (49) (109)
Ifinterestrateswerelowerby1%p.a.withallothervariablesheldconstant-increase/(decrease) 49 109 49 109
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(ii) Other price risk Otherpriceriskistheriskthatthefairvalueofavailable-for-salefinancialassetswillfluctuateduetochangesinmarketprices,otherthanthosearisingfrominterestrateriskandcurrencyrisk.
Sensitivity Analysis Pricesareexpectedtofluctuatebynomorethan10%.Ifpricesofavailable-for-salefinancialassetswerehigherby10%,profitaftertaxandequitywould
increaseby$36,000(2009:$36,000).Acorrespondingdecreaseinprofitaftertaxandequitywouldoccurifpriceswerelowerby10%. (iii)Foreign currency risk Foreigncurrencyriskistheriskthatthefairvalueofafinancialinstrumentoritscashflowswillvary,duetochangesinforeigncurrencyrates. TheGroupconductstransactionssolelyinAustraliandollarsandisnotsubjecttoanyforeigncurrencyrisk.
52
(iv) Credit RiskCreditRiskistheriskthatthefairvalueofafinancialassetwilldecreaseduetothefailureofanentitywithwhomtheGrouptransactstofulfilitscontractualobligations.Theprimarysourceofcreditriskistradereceivablesrelatingtocustomerswhoaregivencredittermsforpaymentofinvoicesforthesupplyofgoodsandservices.Thepracticesinplacetomanagetheserisksare:
-Creditchecksareconductedonallnewcustomers,andcreditlimitsareset;-Collateralheldassecuritymayberequired;-Ongoingassessmentsareconductedonthefairvalueoftradereceivablesand,whereappropriate,aprovisionforbadanddoubtfuldebtorsismadeagainstthoseassetswhichrequireit.
Themaximumexposuretocreditriskisthecarryingvalueoftradereceivablesnetofanyprovisions.Detailsoftradeandotherreceivablesaresetoutinnote8.
(v) Liquidity RiskLiquidityriskistheinherentriskthattheGroupwillhaveinsufficientfundstomeetitscommitmentstosettlefinancialtransactionsandliabilitiesasandwhentheyfalldue.AllfinancialliabilitieswithacontractualmaturitydatecontributetotheGroup’sliquidityrisks.Thepracticesinplacetomanagetheserisksare:
-ongoingcashflowforecastingisperformed;and-acashpolicyisinplacethatmaintainsaminimumlevelofcashandcashequivalents,andaminimumlevelofundrawnbankfacilities.
Thecontractualmaturitydateforfinancialliabilitiesissetoutabove.
(vi) Capital Risk ManagementTheGroup’sandparententity’sobjectiveswhenmanagingcapitalaretosafeguardtheirabilitytocontinueasagoingconcern,sothattheycancontinuetoprovidereturnsforshareholdersandbenefitsforothershareholdersandtomaintainanoptimalcapitalstructuretoreducethecostofcapital.Inordertomaintainoradjustthecapitalstructure,theGroupmayadjusttheamountofdividendspaidtoshareholders,returncapitaltoshareholders,issuenewshares,fundgrowthwithnewdebtorsellassetstoreducedebt.
(b) Financial positionFinancial assets and financial liabilitiesThefairvalueofallfinancialassetsandliabilitiesapproximatestheircarryingvalues.Consequently,inaccordancewithAASB7paragraph29,fairvaluesandcarryingvaluesforeachclassoffinancialassetsandfinancialliabilitiesarenotdisclosedinthenote,asthecarryingvaluesoftheseassetsandliabilitiesaresetoutelsewhereinthefinancialstatements.
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(c) Derivative financial instruments and hedging activitiesTheGroupdoesnotengageinhedgingactivities,conducthedgingtransactionsin,norhold,financialinstrumentstohedgerisks.ConsequentlytheGroup does not perform hedge accounting.
(d) BreachesDuringtheyeartheGrouphasnotbreachedanyofitsagreementswithitslenders,suppliers,customersoremployees.
53
22. Key management personnel disclosures
Total remuneration for Directors and key management personnelConsolidated
2010$
2009$’000
Short-termemploymentbenefits 3,523,707 2,978,367
Postemploymentbenefits 71,043 99,261
Share-basedpayments 407,521 40,954
4,002,271 3,118,582
DetailedremunerationdisclosuresareprovidedintheRemunerationReport.
Shareholdings and Optionholdings of Directors and key management personnel
ThenumberofordinarysharesintheCompanyheldduringthefinancialyearbyDirectorsandkeymanagementpersonnel,includingtheirpersonallyrelated
entitiesaresetoutbelow.
Name
Balance atstart of
the year
Received duringthe year as
remunerationOther changes
during the yearBalance at end
of the year
Non-executive Directors
MrBrianBickmore 90,000 - 40,000 130,000
MrGrahamJones,Chairman 100,541 - - 100,541
MrDavidStanden - - - -
MrGeoffreyWildAM - - - -
Executive Directors
MrChristopherBregenhoj 13,650,000 - - 13,650,000
MrBrendonCook 11,559,250 - - 11,559,250
Total Directors 25,399,791 - 40,000 25,439,791
Other key management personnel
MrNoelCook 500,000 - (500,000) -
MrMichaelEgan 400,500 - - 400,500
MrJohnO’Neill 18,500,000 - (13,500,000) 5,000,000
MrMalcolmPearce - - - -
MrSimonYeandle 676,528 - - 676,528
Total other key management personnel 20,077,028 - (14,000,000) 6,077,028
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Holder
Grant date Vesting date Expiry dateExercise
price
Fair value of each option
at grant date
Outstand-ing at
1 January 2010
Issued during
the year
Lapsed / exercised
duringthe year
Outstand-ing at 31
December 2010
Non-executive Directors
MrBrianBickmore 21May2010 21May2010 20May2015 $0.12 $0.069 - 750,000 - 750,000
MrGrahamJones,Chairman
21May2010 21May2010 20May2015 $0.12 $0.069 - 750,000 - 750,000
MrDavidStanden 21May2010 21May2010 20May2015 $0.12 $0.069 - 750,000 - 750,000
MrGeoffreyWild 21May2010 21May2010 20May2015 $0.12 $0.069 - 750,000 - 750,000
Executive Directors
MrChristopherBregenhoj 21May2010 21May2012 20May2015 $0.12 $0.067 - 1,500,000 - 1,500,000
21May2010 21May2013 20May2015 $0.12 $0.058 - 1,500,000 - 1,500,000
21May2010 21May2014 20May2015 $0.12 $0.050 - 1,500,000 - 1,500,000
MrBrendonCook 21May2010 21May2012 20May2015 $0.12 $0.067 - 2,000,000 - 2,000,000
21May2010 21May2013 20May2015 $0.12 $0.058 - 2,000,000 - 2,000,000
21May2010 21May2014 20May2015 $0.12 $0.050 - 2,000,000 - 2,000,000
Total Directors - 13,500,000 - 13,500,000
Other key management personnel
MrNoelCook 21May2010 21May2012 20May2015 $0.12 $0.067 - 200,000 - 200,000
21May2010 21May2013 20May2015 $0.12 $0.058 - 200,000 - 200,000
21May2010 21May2014 20May2015 $0.12 $0.050 - 200,000 - 200,000
MrMichaelEgan 21May2010 21May2012 20May2015 $0.12 $0.067 - 200,000 - 200,000
21May2010 21May2013 20May2015 $0.12 $0.058 - 150,000 - 150,000
21May2010 21May2014 20May2015 $0.12 $0.050 - 150,000 - 150,000
MrJohnO’Neill 21May2010 21May2012 20May2015 $0.12 $0.067 - 1,700,000 - 1,700,000
21May2010 21May2013 20May2015 $0.12 $0.058 - 1,700,000 - 1,700,000
21May2010 21May2014 20May2015 $0.12 $0.050 - 1,600,000 - 1,600,000
MrMalcolmPearce 21May2010 21May2012 20May2015 $0.12 $0.067 - 200,000 - 200,000
21May2010 21May2013 20May2015 $0.12 $0.058 - 200,000 - 200,000
21May2010 21May2014 20May2015 $0.12 $0.050 - 200,000 - 200,000
MrSimonYeandle 21May2010 21May2012 20May2015 $0.12 $0.067 - 350,000 - 350,000
21May2010 21May2013 20May2015 $0.12 $0.058 - 350,000 - 350,000
21May2010 21May2014 20May2015 $0.12 $0.050 - 300,000 - 300,000
Total other key management personnel - 7,700,000 - 7,700,000
Options provided as remunerationThenumberofoptionsoverordinarysharesintheCompanyheldby,andprovidedasremunerationto,Directorsandkeymanagementpersonnelincluding
theirpersonallyrelatedentities,duringthefinancialyear,aresetoutbelow.
Notes to the Financial Statements31December2010
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Notes to the Financial Statements31December2010
23. Cash flow information
(a) Reconciliation of cash flow from operating activities with profit from ordinary activities after income taxConsolidated
2010$’000
2009$’000
Profit on ordinary activities after income tax 7,028 4,891
Depreciationandamortisation 4,306 3,779
Non-cashemployeebenefitsexpense-employeeentitlements 306 15
Sharebasedpaymentsexpense 422 41
Non-cashborrowingcosts 1,193 321
Lossondisposalofnon-currentassets - 898
(Increase)intradedebtors (3,146) (2,149)
(Increase)inotheroperatingassets (1,182) (353)
Decreaseintaxassetsandliabilities 224 436
Increase in trade creditors 1,386 267
Increaseinotheroperatingliabilities 3,495 1,551
Net cash inflow from operating activities 14,032 9,697
(b) Reconciliation of cash
Cashattheendofthefinancialyearisreconciledtotherelateditemsinthebalancesheetasfollows:
Cash(seenote7) 6,525 307
Bankfacilitiesdrawn(seenote15) (151) (5,306)
6,374 (4,999)
(c) Non-cash financing and investing activities
Consolidated
2010$’000
2009$’000
Acquisitionofplantandequipmentbymeansoffinanceleases 375 256
24. ContingenciesAt31December2010,theGrouphasissuedbankguaranteesinrespectofpropertyleasesandcontractstotalling$1,913,773(2009:$2,371,668).Thesearenotexpectedtobedrawnonatanytime,andarereturnableuponleaseandcontracttermination.Otherthantheguaranteesmentionedabove,theGrouphadnocontingentliabilitiesorassetsat31December2009and31December2010.
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Notes to the Financial Statements31December2010
25. Capital and lease commitments
(a) Capital commitments
At31December2010theGrouphadnocapitalexpenditurecontractedfor.
(b) Lease commitments
Consolidated
2010$’000
2009$’000
Operating leases
Commitmentsforminimumleasepaymentsinrelationtonon-cancellableoperatingleasesarepayableasfollows:
-withinoneyear 24,979 20,964
-laterthanoneyearbutnotlaterthan5years 48,098 51,493
-laterthan5years 5,151 9,679
Commitmentsnotrecognisedinthefinancialstatements 78,228 82,136
Operatingleasecommitmentsincludeminimumcontractedpaymentsinrelationtonon-cancellableout-of-homemediaassetleases,licencesandcontracts.
Finance leases
Commitmentsinrelationtofinanceleasesarepayableasfollows:
-withinoneyear 2,076 2,300
-laterthanoneyearbutnotlaterthan5years 1,774 3,474
-laterthan5years - -
Minimumleasepayments 3,850 5,774
Less:futurefinancecharges (324) (636)
Recognisedasaliability 3,526 5,138
Representingleaseliabilities:
Current(seenote15) 1,861 1,943
Non-current(seenote17) 1,665 3,195
3,526 5,138
Theweightedaverageinterestrateimplicitintheleasesis8.6%p.a.(2009:8.9%p.a.).Therentalcommitmentsrepresentfixedportionsoflong-termrentalcontracts.TheDirectorsbelievethattheassociatedfuturerevenuestreamswillbesufficienttocoverthesecommitments.
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Notes to the Financial Statements31December2010
26. Employee benefitsConsolidated
2010$’000
2009$’000
Employee benefits and related on-costs liabilities
Provisionforemployeebenefits-current(seenote16) 452 371
Provisionforemployeebenefits-non-current(seenote18) 755 575
Aggregateemployeebenefitsandon-costsliabilities 1,207 946
Employee numbers
Numberofemployeesatthereportingdate 129 105
27. Related party transactions
(a) Wholly owned Group
ThewhollyownedGroupconsistsofoOh!mediaGroupLimitedanditswhollyownedcontrolledentities,listedinnote28.
TransactionsbetweenoOh!mediaGroupLimitedandotherentitieswithinthewhollyownedGroupduringtheyearended31December2010consistedof:-managementfeeschargedbyoOh!mediaGroupLimited;-loansadvancedbyandtooOh!mediaGroupLimited;and -investmentsinsubsidiariesofoOh!mediaGroupLimited
(b) Other transactions with Directors and key management personnel
TherewerenoothertransactionswithDirectorsorkeymanagementpersonnel,otherthanthosedisclosedintheRemunerationReport.
57F
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Notes to the Financial Statements31December2010
28. Investments in controlled entities and business combinations
Country of incorporation Class of shares 2010 2009
oOh!mediaAssetsPtyLimited Australia Ordinary 100% 100%
oOh!mediaDigitalPtyLimited Australia Ordinary 100% 100%
oOh!mediaFactorPtyLimited Australia Ordinary 100% 100%
oOh!mediaLifestylePtyLimited Australia Ordinary 100% 100%
oOh!mediaProducePtyLimited Australia Ordinary 100% 100%
oOh!mediaPtyLimited Australia Ordinary 100% 100%
oOh!mediaRetailPtyLimited Australia Ordinary 100% 100%
oOh!mediaRoadsidePtyLimited Australia Ordinary 100% 100%
oOh!mediaShopPtyLimited Australia Ordinary 100% 100%
oOh!mediaTransportPtyLimited Australia Ordinary 100% 100%
oOh!mediaTryvertisingPtyLimited Australia Ordinary 100% 100%
SportsandOutdoorMediaPtyLtd Australia Ordinary 100% 100%
Effective equity holding
(a) Acquisition of controlled entities
(1) On23July2008,theCompanyannouncedthatithadenteredintoanagreementtopurchase100percentoftheissuedsharecapitalofSportsandOutdoorMediaPtyLimitedforatotalof$45.8millioncomprising$40millionconsideration,$1.5millionacquisitioncostsandaperformancebasedpaymentofapproximately$4.3millionincashandshares.UndertheacquisitionagreementtheGroupwouldacquirethewholeoftheissuedsharecapitalofSports&OutdoorMediaPtyLimitedintwostages.ThefirststagewouldseeoOh!mediaacquire65percentoftheissuedcapitalofSports&OutdoorMediaPtyLimitedon1September2008followedbytheremaining35percenton31December2009.Theconsiderationof$40millionwaspayablebyinstalmentswith$21.5millioncashpayableonsettlement,withthesecondinstalmentof$18.5millionpayableby31December2009incashand/orsharesinoOh!mediaGroupLimitedatthevendor’sdiscretion.Thesecondinstalmentwasacontractualcommitmentandwasexpectedtobefundedbyamixtureofdebtandequity.Inaddition,theGroupwouldpayaperformancebasedpaymentinrespectofSports&OutdoorMedia’sfinancialperformancefortheperiodbetween1September2008and31December2009.
On16November2009,theCompanyannouncedthatithadfinalisednegotiationstoextendthedateoffinalpaymentforSportsandOutdoorMediaPtyLimitedto31December2011,withtherightforearlyrepayment.Underthenewagreement,theGroupextendedthefinalinstalmentto31December2011,fortheissueof$1.2millioninsharesiftheoutstandingamountwasnotpaidby31December2009,andafurtherpaymentof$1.2millionincashifthefinalinstalmentwasnotmetby31March2010.Thecompanyalsoannouncedthataspertheoriginalacquisitionagreement,deferredconsiderationof$2.3millionincashand10millionoOh!mediasharesforachievingtheperformancecriteriawouldbesettledby31March2010.
On31January2011,theCompanyannouncedithadmadethefinalpaymentforitsSportsandOutdoorMediaPtyLtdacquisitionearlierthanthecontracteddate,followingitsrecentsuccessfulcapitalraising.Undertheearlysettlementagreement,$18.5millionwaspaidtothevendor,consistingof$4.2millioninordinarysharesat20centspershareand$14.3millionincashforthebalanceofthedeferredconsideration.Therearenofurtherpaymentstobemadeinrespectofthisacquisition.
(2) On9December2010,theCompanycompletedtheacquisitionoftheoutdooradvertisingassetsoftheNSW-basedoutdooradvertisingbusinessPrimePositionsforaconsiderationof$1.65million,paidincashoncompletion.Itisnotpracticabletodiscloseseparatelytheacquiree’sprofitorlossincludedinthecompany’sprofitfortheyearsincethedateofacquisition,orasiftheacquisitionoccurredon1January2010,becausealltheacquiredbusinessassetshavebeenintegratedintotheCompany’soperations.
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Notes to the Financial Statements31December2010
Detailsoftheacquisitionsareasfollows:
2010Out-of-home advertising businesses
2009Out-of-home advertising businesses
$’000Total
$’000 $’000Total
$’000
Aggregate fair value of assets acquired and liabilities assumed
Plantandequipment 313 313 - -
Intangibleassets 1,337 1,337 - -
Total fair value of assets acquired and liabilities assumed 1,650 1,650 - -
Settled by:
Cashpaidincurrentyear 1,650 1,650 - -
Carrying amount of assets acquired and liabilitiesassumed immediately before the combination
Plantandequipment 313 313 - -
Intangibleassets 1,337 1,337 - -
Total carrying amount of assets acquired and liabilitiesassumed immediately before the combination 1,650 1,650 - -
Consolidated
2010$’000
2009$’000
Outflow of cash to acquire controlled entities or businesses net of cash acquired
Cashconsiderationpaidincurrentyear(seeStatementofCashFlows) (5,600) (1,446)
Total (5,600) (1,446)
29. Events occurring after the reporting date
(a)FollowingthepassingoftworesolutionsatameetingoftheCompany’sshareholderson14January2011:
theissueof57,142,857ordinarysharesintheCompanyon6December2010,at21centspershare,raising$12million,wasratified;andafurtherissueof42,105,263ordinarysharesintheCompanyat19centspershare,raisingafurther$8million,wasapproved.
(b)On31January2011,theCompanyannouncedithadmadethefinalpaymentforitsSportsandOutdoorMediaPtyLtdacquisition.Seenote28fordetails.
Asat31March2011therewerenoothermatterstoreportafterthereportingdate.
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Notes to the Financial Statements31December2010
30. Authorisation for issue
ThefinancialreportofoOh!mediaGroupLimitedfortheyearended31December2010wasauthorisedforissueinaccordancewitharesolutionofthe
Directorson31March2011.
31. Earnings per share
Consolidated
2010cents
2009cents
Earnings per share for profit from continuing operations attributable tothe ordinary equity holders of the Company
Basicearningspershare 1.8 1.3
Dilutedearningspershare 1.8 1.3
Theearningsusedtocalculatethebasicearningspersharefromcontinuingoperationsare$7,028,000(2009:$4,891,000)beingtheprofitfromcontinuingoperationsattributabletotheordinaryequityholdersoftheCompany
Theearningsusedtocalculatethedilutedearningspersharefromcontinuingoperationsare$7,077,000(2009:$4,891,000)beingtheprofitfromcontinuingoperationsattributabletotheordinaryequityholdersoftheCompany.
Earnings per share for profit attributable to the ordinary equity holders of the Company
Basicearningspershare 1.8 1.3
Dilutedearningspershare 1.8 1.3
Theearningsusedtocalculatethebasicearningspershareare$7,028,000(2009:$4,891,000)beingtheprofitattributabletoordinaryequityholdersoftheCompany.
Theearningsusedtocalculatethedilutedearningspershareare$7,028,000(2009:$4,891,000)beingtheprofitattributabletotheordinaryequityholdersoftheCompany.
Weightedaveragenumberofordinarysharesoutstandingduringtheyearusedinthecalculationofbasicearningspershare 382,425,296 370,977,155
Weightedaveragenumberofordinarysharesoutstandingduringthe year used in the calculation of diluted earnings per share 383,014,537 370,977,155
Options
Optionsexercisableatlessthantheaveragemarketpriceforordinarysharesareconsidereddilutiveinthecalculationofpotentialordinaryshares.Thenumberofpotentialordinarysharesdeemedtohavebeenissuedandincludedinthedeterminationofdilutedearningspershareis589,241(2009:nil).
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Notes to the Financial Statements31December2010
32. Parent entity financial information
(a) Summary financial information
Theindividualfinancialstatementsfortheparententityshowthefollowingamounts:
Parent Entity
2010$’000
2009$’000
Current Assets 3,530 116
Non-Current Assets 95,308 95,056
Total Assets 98,838 95,172
Current Liabilities 5,213 11,437
Non-Current Liabilities 39,612 38,230
Total Liabilities 44,825 49,667
Net Assets 54,013 45,505
Equity
Contributedequity-sharecapital 79,547 66,996
Reserves 422 -
(Accumulatedlosses) (25,956) (21,491)
Total Equity 54,013 45,505
Profit and total comprehensive income for the year (4,465) (1,632)
(b) Guarantees entered into by the parent entity
At31December2010,theparententityhasprovidedfinancialguaranteesonbehalfofcontrolledentitiesinrespectofpropertyleaseandcontractstotalling
$489,355(2009:$489,355).Thesearenotexpectedtobedrawnonatanytimeandarereturnableuponleaseandcontracttermination.
Theparententityhasalsoprovidedfinancialguaranteesinrespectofbankfacilities,securedbyafixedandfloatingchargeoveralltheassetsoftheGroup.
(c) Contingent liabilities of the parent entity
Theparententitydidnothaveanycontingentliabilitiesasat31December2010or31December2009.
(d) Commitments for expenditure
Theparententitydidnothaveanycapitalexpenditureorleasecommitmentscontractedforasat31December2010or31December2009.
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TheDirectorsofoOh!mediaGroupLimiteddeclarethat:
(a)intheDirectors’opinionthefinancialstatementsandnotessetoutonpages24to61andtheRemunerationreportintheDirectors’Report setoutonpages19to14,areinaccordancewiththeCorporationsAct2001,including:(i)givingatrueandfairviewoftheGroup’sfinancialpositionasat31December2010andoftheirperformance,for thefinancialyearendedonthatdate;and(ii)complyingwithAustralianAccountingStandards(includingtheAustralianAccountingInterpretations)andCorporationsRegulations2001.(b)thefinancialreportalsocomplieswithInternationalFinancialReportingStandardsasdisclosedinnote1;and(c)therearereasonablegroundstobelievethatthecompanywillbeabletopayitsdebtsasandwhentheybecomedueandpayable.
TheDirectorshavebeengiventhedeclarationsrequiredbySection295AoftheCorporationsAct2001bytheChiefExecutiveOfficerandChiefFinancialOfficerforthefinancialyearended31December2010.
SignedinaccordancewitharesolutionoftheDirectors.
Christopher BregenhojDirector31March2011
Directors’ Declaration
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63
AUDITOR'S INDEPENDENCE DECLARATION
TO: The Directors oOh!media Group Limited
As lead auditor for the audit of oOh!media Group Limited for the year ended 31 December 2009, I declare that to the best of my knowledge and belief there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of oOh!media Group Limited and the entities it controlled during the year.
PKF
Paul Bull 31 March 2010Partner Sydney
Tel: 61 2 9251 4100 | Fax: 61 2 9240 9821 | www.pkf.com.au PKF | ABN 83 236 985 726 Level 10, 1 Margaret Street | Sydney | New South Wales 2000 | Australia DX 10173 | Sydney Stock Exchange | New South Wales
The PKF East Coast Practice is a member of the PKF International Limited network of legally independent member firms. The PKF East Coast Practice is also a member of the PKF Australia Limited national network of legally independent firms each trading as PKF. PKF East Coast Practice has offices in NSW, Victoria and Brisbane. PKF East Coast Practice does not accept responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.
Liability limited by a scheme approved under Professional Standards Legislation.
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64
AUDITOR'S INDEPENDENCE DECLARATION
TO: The Directors oOh!media Group Limited
As lead auditor for the audit of oOh!media Group Limited for the year ended 31 December 2009, I declare that to the best of my knowledge and belief there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of oOh!media Group Limited and the entities it controlled during the year.
PKF
Paul Bull 31 March 2010Partner Sydney
Tel: 61 2 9251 4100 | Fax: 61 2 9240 9821 | www.pkf.com.au PKF | ABN 83 236 985 726 Level 10, 1 Margaret Street | Sydney | New South Wales 2000 | Australia DX 10173 | Sydney Stock Exchange | New South Wales
The PKF East Coast Practice is a member of the PKF International Limited network of legally independent member firms. The PKF East Coast Practice is also a member of the PKF Australia Limited national network of legally independent firms each trading as PKF. PKF East Coast Practice has offices in NSW, Victoria and Brisbane. PKF East Coast Practice does not accept responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.
Liability limited by a scheme approved under Professional Standards Legislation.
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65
AUDITOR'S INDEPENDENCE DECLARATION
TO: The Directors oOh!media Group Limited
As lead auditor for the audit of oOh!media Group Limited for the year ended 31 December 2009, I declare that to the best of my knowledge and belief there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of oOh!media Group Limited and the entities it controlled during the year.
PKF
Paul Bull 31 March 2010Partner Sydney
Tel: 61 2 9251 4100 | Fax: 61 2 9240 9821 | www.pkf.com.au PKF | ABN 83 236 985 726 Level 10, 1 Margaret Street | Sydney | New South Wales 2000 | Australia DX 10173 | Sydney Stock Exchange | New South Wales
The PKF East Coast Practice is a member of the PKF International Limited network of legally independent member firms. The PKF East Coast Practice is also a member of the PKF Australia Limited national network of legally independent firms each trading as PKF. PKF East Coast Practice has offices in NSW, Victoria and Brisbane. PKF East Coast Practice does not accept responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.
Liability limited by a scheme approved under Professional Standards Legislation.
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Shareholder Information
Shareholder Information
Theshareholderinformationsetoutbelowisapplicableasat21March2011.
(a) Distribution of equity securities
Analysisofnumberofequitysecurityholdersbysizeofholding:
Number of security holders
Range of security holdings Ordinary shares Options
1-1,000 69 -
1,001-5,000 491 -
5,001-10,000 146 -
10,001-100,000 200 -
100,001andover 53 14
Total number of security holders 959 14
103shareholdersholdlessthanamarketableparcelofshares.
(b) Equity security holdersThenamesofthetwentylargestholdersofquotedequitysecuritiesarelistedbelow:
Ordinary shares
NameNumber
heldPercentage of
issued shares %
HubXPtyLtd 135,752,944 27.08
CavendishSquareHoldingBV 119,000,000 23.74
PFGInvestmentsPtyLtd 69,574,373 13.88
WilliamShawCapitalPtyLimited 52,105,263 10.40
MrRayBalcomb 21,000,000 4.19
RPProspectsPtyLimited 17,110,000 3.41
SteelPriceSuperannuationFund 13,650,000 2.72
JPMorganNomineesAustraliaLimited 11,445,522 2.28
SmallCoInvestmentManagerLtd 10,055,402 2.01
MrsDebraCook 8,000,000 1.60
SpencerStreetSuperPtyLtd 7,325,000 1.46
MrJohnO’Neill 5,000,000 1.00
NationalNomineesLimited 4,516,641 0.90
MrBrendonCook 2,500,000 0.50
BondStreetCustodiansLtd 2,182,549 0.44
RBCDexiaInvestorServicesAustraliaNomineesPtyLtd 1,523,788 0.30
MrArthurGleeson 1,500,000 0.30
MrMarkAndrewDorney 1,134,096 0.23
147049938PtyLtd 800,000 0.16
YeandleSuperannuationFund 676,528 0.12
Top 20 holders of ordinary shares as at 18 March 2010 484,852,106 96.72
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Shareholder Information
NameNumberon issue
Number of holders
Unquoted equity securities
Optionsissuedtotakeupordinaryshares 23,000,000 14
(c) Substantial holders of equity securities
SubstantialholdersofequitysecuritiesintheCompanyaresetoutbelow:
Name
Numberof ordinary shares held
Percentage%
HubXPtyLtd 135,752,944 27.08
CavendishSquareHoldingBV 119,000,000 23.74
PFGInvestmentsPtyLtd 69,574,373 13.88
WilliamShawCapitalPtyLimited 52,105,263 10.40
(d) Voting rightsThevotingrightsattachingtoeachclassofequitysecuritiesaresetoutbelow:
OrdinarysharesOnashowofhandseverymemberpresentatameetinginpersonorbyproxyshallhaveonevoteanduponapolleachshareshallhaveonevote.
OptionsNovotingrights.
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Corporate Directory
Registered OfficeLevel6165WalkerStreetNorthSydneyNSW2060t.+61(2)99275555f.+61(2)99275599www.oohmedia.com.au
Company SecretaryMichaelEgan
Share RegistryComputershareInvestorServicesPtyLimited452JohnstonStreetAbbotsfordVIC3000t.+61(3)96115711
Stock Exchange ListingoOh!mediaGroupLimitedsharesandoptionsarelistedontheAustralianStockExchange(code:OOH)
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oOh!media
SydneyLevel 6 165 Walker StreetNorth Sydney NSW 2060t. +61 (2) 9927 5555f. +61 (2) 9927 5599
MelbourneLevel 3165 Fitzroy StreetSt Kilda VIC 3182t. +61 (3) 8598 0700f. +61 (3) 8598 0701
Brisbane3 Prospect StreetFortitude Valley QLD 4006t. +61 (7) 3620 2900f. +61 (7) 3257 1618
AdelaideLevel 177 King William RoadNorth Adelaide SA 5006t. +61 (8) 8361 9611f. +61 (8) 3257 1618
www.oohmedia.com.au
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